90.2K

Verified Solution

Link Copied!

Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2013, financial statements:

For the Year Ended December 31, 2013:
Net revenues	$	32,600
Cost of services provided		11,300
Depreciation expense		5,000
Operating income	$	16,300
Interest expense		3,800
Income tax expense		3,400
Net income	$	9,100
At December 31, 2013:
Assets
Cash and short-term investments	$	2,600
Accounts receivable, net		9,700
Property, plant, and equipment, net		80,400
Total assets	$	92,700
Liabilities and Stockholders' Equity
Accounts payable	$	2,000
Income taxes payable		1,300
Notes payable (long term)		47,100
Paid-in capital		13,000
Retained earnings		29,300
Total liabilities and stockholders' equity	$	92,700
Calculate the following financial leverage measures for Gerrard Construction Co. at December 31, 2013: 1. Calculate the debt ratio. (Round your answer to 1 decimal place.) 2. Calculate the Debt/equity ratio. (Round your answer to 1 decimal place.)

Answer & Explanation Solved by verified expert

See Answer