Canadian Bacon Inc. financial statements are presented in the table below. Based
ID: 2727797 • Letter: C
Question
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm’s total debt-to-equity ratio.
Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).
Balance Sheet December 31, 2014
Cash and marketable securities
$132,000
Accounts payable
$399,000
Accounts receivable
$311,000
Notes payable
$98,500
Inventories
$512,000
Accrued expenses
$89,300
Prepaid expenses
$11,300
Total current liabilities
$586,800
Total current assets
$966,300
Long-term debt
$799,400
Gross fixed assets
$2,104,000
Par value and paid-in-capital
$298,000
Less: accumulated depreciation
$398,000
Retained Earnings
$988,100
Net fixed assets
$1,706,000
Common Equity
1,286,100
Total assets
$2,672,300
Total liabilities and owner’s equity
$2,672,300
Income Statement, Year of 2014
Net sales (all credit)
$4,276,600.00
Less: Cost of goods sold
$3,292,982.00
Selling and administrative expenses
$349,000.00
Depreciation expense
$148,000.00
EBIT
$486,618.00
Interest expense
$49,600.00
Earnings before taxes
$437,018.00
Income taxes
$174,807.20
Net income
$262,210.80
Cash and marketable securities
$132,000
Accounts payable
$399,000
Accounts receivable
$311,000
Notes payable
$98,500
Inventories
$512,000
Accrued expenses
$89,300
Prepaid expenses
$11,300
Total current liabilities
$586,800
Total current assets
$966,300
Long-term debt
$799,400
Gross fixed assets
$2,104,000
Par value and paid-in-capital
$298,000
Less: accumulated depreciation
$398,000
Retained Earnings
$988,100
Net fixed assets
$1,706,000
Common Equity
1,286,100
Total assets
$2,672,300
Total liabilities and owner’s equity
$2,672,300
Explanation / Answer
Debt-to-Equity Ratio = Debt/Equity
Debt = Current Liabilities + Long term debt = $586,800 + $799,400 = $1,386,200
Equity = Common Equity = $1,286,100
Debt-to-Equity Ratio = $1,386,200 / $1,286,100 = 1.077832
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