Estaiban?s Taco Shack Current Income Statement Gross Sales $430,000 100% Ret/All
ID: 2646210 • Letter: E
Question
Estaiban?s Taco Shack
Current Income Statement
Gross Sales $430,000 100%
Ret/Allowances 20,000 5%
Net Sales $410,000 95%
Cost of Goods Sold $150,500 35%
Gross Profit $259,500 60%
Operating Expenses
Payroll $103,200 24%
Rent 50,100 11%
Debt Service 21,500 5%
Advertising 12,900 3 %
Insurance 8,600 2%
Maintenance 8,600 2%
Total Op Exp $204,900 47%
Earnings Before Taxes (EBT) $ 54,600 13 %
Estaiban?s Taco Shack
Current Balance Sheet
Assets Liabilities
Current Assets Current Liabilities
Cash $30,300 Payroll Payable $7,000
Inventory $25,100 Taxes Payable $9,000
A/R $ 4,100 A/P $21,400
Total $59,500 S/T Loan $3,700
Total $41,100
Fixed Liabilities
Fixed Assets Mortgage $85,000
Land $135,000 L/T Loan $ 14,500
Buildings $ 72,000 Total $99,500
Fixtures $ 20,700 Total Liabilities $140,600
Equipment $ 35,700 Net Worth $182,300
Total $263,400 Liabilities + Net Worth $322,900
Total Assets $322,900
4. Debt Ratios: Debt Ratio = _____.44_______, Leverage Ratio = ____________
Could you please break down how to get the leverage ratio. Thanks!
Estaiban's Taco Shack Current Income Statement Gross Sales Ret/Allowances Net Sales Cost of Goods Sold Gross Profit Operating Expenses S430,000 20,000 S410,000 S150,500 S259,500 100% 5% 95% 35% 60% S103,200 50,100 21,500 12,900 8,600 8,600 S204,900 S 54,600 24% 11% 5% 3% 2% 2% 47% Payroll Rent Debt Service Insurance Total Op Exp Earnings Before Taxes (EBT) 13% Estaiban's Taco Shack Current Balance Sheet Assets Current Assets Liabilities Current Liabilities S30,300 S25,100 Cash Inventory A/R Payroll Payable Taxes Payable A/P S/T Loan Total $7,000 S9,000 $21,400 S3,700 S41,100 Total S59,500 Fixed Liabilities Fixed Assets $85,000 Mortgage LT Loarn Total Total Liabilities S135,000 Land Buildings Fixtures S99,500 $140,600 Net Worth Liabilities +Net Worth Total Total Assets S263,400 S322,900 $322,900 Given the above Income statement and balance sheet, answer the following questions:Explanation / Answer
Leverage ratio = Total Liability/Net Worth
Leverage ratio = 140600/182300
Leverage ratio = 0.77
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