Financial? ratios: Financial leverage. The financial statements for Tyler? Toys, Inc. are shown below. Calculate the debt?...

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Finance

Financial? ratios: Financial leverage. Thefinancial statements for Tyler? Toys, Inc. are shown below.Calculate the debt? ratio, times interest earned? ratio, and cashcoverage ratio for 2013 and 2014 for Tyler Toys. Should any ofthese ratios or the change in a ratio warrant concern for themanagers of Tyler Toys or the? shareholders?
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and2014
2014
2013
Revenue
$14,146,008
$13,566,936
Cost of goods sold
$-8,448,426
$-8,131,134
Selling, general, and
administrative expenses
$-998,344
$-981,543
Depreciation
$-1,497,033
$-1,471,281
EBIT
$3,202,205
$2,982,978
Interest expense
$-375,885
$-355,036
Taxes
$-1,074,002
$-998,618
Net income
$1,752,318
$1,629,324
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Tyler Toys, Inc.
Balance Sheet as of December 31, 2013 and2014
ASSETS
2014
2013
LIABILITIES
2014
2013
Current assets
Current liabilities
Cash
$190,181
$187,027
Accounts payable
$1,546,608
$1,456,241
Investments
$181,543
$121,902
Short-term debt
$311,633
$332,971
Accounts receivable
$668,944
$631,449
Total current liabilities
$1,858,241
$1,789,212
Inventory
$588,917
$564,689
Long-term liabilities
Total current assets
$1,629,585
$1,505,067
Debt
$7,285,372
$6,603,223
Long-term assets
Other liabilities
$1,463,238
$1,346,613
Investments
$3,053,588
$2,827,617
Total liabilities
$10,606,851
$9,739,048
Plant, property, and equipment
$8,497,812
$8,481,131
OWNERS’ EQUITY
Goodwill
$347,644
$347,719
Common stock
$1,458,998
$1,454,254
Intangible assets
$1,158,701
$956,816
Retained earnings
$2,621,481
$2,925,048
Total owners’ equity
$4,080,479
$4,379,302
TOTAL LIABILITIES
TOTAL ASSETS
$14,687,330
$14,118,350
AND OWNERS’ EQUITY
$14,687,330
$14,118,350
What is the debt ratio for? 2014? ____ ?(Round to fourdecimal? places.)
What is the debt ratio for? 2013? ?(Round to fourdecimal? places.)
What is the times interest earned ratio for? 2014? ?(Round to four decimal? places.)
What is the times interest earned ratio for? 2013? _?(Round to four decimal? places.)
What is the cash coverage ratio for? 2014? ?(Round tofour decimal? places.)
What is the cash coverage ratio for? 2013? __ ?(Round tofour decimal? places.)
Should any of these ratios or the change in a ratio warrantconcern for the managers of Tyler Toys or the?shareholders??(Select the best? response.)
A. The debt ratio is very high and would warrant concern if thecash coverage ratio or the times interest earned ratio was? high,but with low ratios this means they are handling their large debtwell.
B. The debt ratio is very low and would warrant concern if thecash coverage ratio or the times interest earned ratio was? high,but with low ratios this means they are handling their large debtwell.
C. The debt ratio is very high and would warrant concern if thecash coverage ratio or the times interest earned ratio was? low,but with high ratios this means they are handling their large debtwell.
D. The debt ratio is very low and would warrant concern if thecash coverage ratio or the times interest earned ratio was? low,but with high ratios this means they are handling their large debtwell.

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1 Calculation of debt ratio Debt Ratio Total Liabilities Total Assets 2013 973904814118350 06898 2014 1060685114687330 07221 2 Times Interest Earned Ratio EBIT Interest See Answer

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