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The financial statements of Midwest Tours are given below. Midwest Tours Income Statement...

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Accounting

The financial statements of Midwest Tours are given below.
Midwest Tours Income Statement (2009)
Sales $ 2,500,000
Cost of goods sold 1,260,000
Gross profit 1,240,000
Selling & administrative expenses 700,000
Operating profit 540,000
Interest expense 160,000
Income before tax 380,000
Tax expense 152,000
Net income $ 228,000
Balance Sheet 20092008
Cash $ 60,000 $ 50,000
Accounts receivable 500,000450,000
Inventory 300,000270,000
Total current assets $ 860,000 $ 770,000
Fixed assets 2,180,0002,000,000
Total assets $ 3,040,000 $ 2,770,000
Accounts Payable $ 200,000 $ 170,000
Bank loan 460,000440,000
Total current liabilities $ 660,000 $ 610,000
Bond payable 860,000860,000
Total liabilities $ 1,520,000 $ 1,470,000
Common stock (130,000 shares) $ 120,000 $ 120,000
Retained earnings 1,400,0001,300,000
Total liabilities & equity $ 3,040,000 $ 2,890,000
Note: The common shares are trading in the stock market for $36 each.
Refer to the financial statements of Midwest Tours. The firm's leverage ratio for 2009 is:
Multiple Choice
2.00.
1.62.
2.17.
1.56.
2.42.

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