Kim Chen Corporation Is a Wholesaler of Scuba Gear

Question

Examlex · Accepted Answer

The Answer is ?
1) A.

\begin{array}{l} ext { Total Liabilities/Total Stockholders' Equity = } \2018: \$ 26,000 / \$ 34,000=0.76 ext { to } 1 \2017: \$ 18,000 / \$ 38,000=0.47 ext { to } 1\end{array}

B. (Net Income + Interest Expense + Income Tax Expense)/Interest Expense

=

2018 : ( \$ 6,000 + \$ 3,400 + \$ 12,600 ) / \$ 3,400 = 6.47

to 1

2017 : ( \$ 15,000 + \$ 3,200 + \$ 18,100 ) / \$ 3,200 = 11.34

to 1
?
2)
Both the debt-to-equity ratio and the times interest earned ratio are indicators of solvency. The debt-to-equity ratio indicates the company's ability to pay liabilities, which is about 76 cents of every doll ar of net worth for 2018 . The times interest eamed ratio indicates the company earns about 6.5 times as much as the amount of interest expense incurred. The times interest earned ratio has declined substantially from 2017 to 2018 .
3)
The debt service coverage ratio is an indicator of the company's ability to pay both principal and interest. For this reason, it is a better indicator of overall solvency. The cash flow from operation to capital expenditures ratio is help ful in that it indicates the company's ability to generate cash instead of accrual basis eamings.

Kim Chen Corporation Is a Wholesaler of Scuba Gear

Essay

Correct Answer:
Verified

Kim Chen Corporation Is a Wholesaler of Scuba Gear

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified