Please show all work Debt ratio, Ratio of Liabilities to Stockholders\' Equity,

Question

Please show all work

Debt ratio, Ratio of Liabilities to Stockholders' Equity, and Times Interest Eamed Camper Company and McSead, Inc., are the two largest toy companies. Condensed liabilities and stockholders' equity from a recent balance sheet are shown for each company as follows: Camper McSead Current liabilities Long-term debt Total liabilities Total stockholders' equity Total liabilities and stockholders' equity The income from operations and interest expense from the income statement for both companies were as follows $2,661,000 1,562,100 $4,223,100 6,033,000 $10,256,100 $1,153,000 621,500 $1,774,500 3,549,000 $5,323,500 Camper McSead Income from operations before tax 433,011.3 $1,570,800 Interest expense a. Determine the debt ratio for both companies. Round to one decimal place. Campe McSead b. Determine the ratio of liabilities to stockholders' equity for both companies. Enter your answers as decimal values rounded to one decimal place. Camper McSead c. Determine the number of times interest charges are earned for both companies. Round to one decimal place. 33,700 130,900 0.5 0.7 McSead d. What condlusions can be drawn from these data as to the ability of these two companies to meet their interest obligations? Earnings appear more than enough for both companies to make their required interest payments.

Explanation / Answer

Total asset =Total stockholders and liabilites

[433011.3+33700]/33700

13.8

[1570800+130900]/130900

=13

**Earning beforeinterest and tax =Income before tax+interest

d)On the basis of above ratio ,it can be say that camper is performing better in financial terms than Mcsead as its debt to equity as well as debt ratiois lower .Also it times to interest earne ratio is also higher.

camper MCsead Debt ratio Total liabilites/Total asset 1774500/5323500 4223100/10256100 33.3% 41.2% Number of times interest earned EBIT/interest

[433011.3+33700]/33700

13.8

[1570800+130900]/130900

=13

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