Galaxy United, Inc. 2009 Income Statement ($ in thousands) Net sales Less: Cost

Question

Galaxy United, Inc. 2009 Income Statement ($ in thousands) Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable Income Less: Taxes Net income $5,770 4,070 420 1,280 29 1,251 438 Galaxy United, Inc. 2008 and 2009 Balance Sheets ($ in thousands) 2009 $ 180 2008 2008 2009 Cash Accounts rec. Inventory $75 980 1,470 $2,525 3,530 820 1,950 $2,950 3,280 Accounts pavable Long-term debt Common stock Retained earnings 730 $3,075 920 $1,210 510 $3,277 1,233 Net fixed assets Total assets Total liab. & equity $6,055 What is the debt-equity ratio for 2009? 24 38 27 47 46

Explanation / Answer

Debt- Equity Ratio Total Debts/ Shareholders Equity Total Debts Accounts Payable 1210 Long Term Debt 510 Total 1720 Equity Common Stock 3277 Retained Earnings 1233 Total 4510 Debt-Equity ratio 1720/4510 Debt-Equity ratio 0.38 The correct answer is B. .38

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