Selected financial data for Bahama Bay and Caribbean Key are as follows: 1-a, Ca

ID: 2460705 • Letter: S

Question

Selected financial data for Bahama Bay and Caribbean Key are as follows: 1-a, Calculate the debt to equity ratio for Bahama Bay and Caribbean Key for the most recent year. (Do not round intermediate calculations. Round ratios answers to 1 decimal place. Enter dollar answer in millions, (i.e., $5,500,000 should be entered as 5.5).) 2-a Calculate the return on assets for Bahama Bay and Caribbean Key. (Do not round intermediate calculations. Round ratios answers to 1 decimal place. Enter dollar answer in millions, (i.e., $5,500,000 should be entered as 5.5) Which company appears more profitable? Bahama Bay Caribbean Key 3-a Calculate the times interest earned ratio for Bahama Bay and Caribbean Key. (Do not round intermediate calculations. Round ratios answers to 1 decimal place. Enter dollar answer in millions, (i.e., $5,500,000 should be entered as 5.5).)

Explanation / Answer

Solution :

Bahame Bay

Carribbean Key

1a debt to equity ratio=total liabilities/total stockholder equity

5.0

5.5

8062/1601

7503/1360

2.a Return on asset=net income/total asset

3.4%

4.0%

325/9663

358/8863

2b. Carribbean key is more profitable as it has higher Return on investment.

3.a times interest earned ratio = Income before interest and tax/inerest

3.0

5.4

(325+74+204)/204

(358+348+159)/159