Global Campus Ratio Analysis 

Global Campus Ratio Analysis

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Global Campus Ratio Analysis Exercises and Problems

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OPTION 1: RATIO ANALYSIS EXERCISES AND PROBLEMS

Use the net income statement for Summer Peebles, Inc., below, to do the following assigned problems.

Compute the following earnings coverage ratios:

Earnings to fixed charges.

Cash flow to fixed charges.

Earnings coverage of preferred dividends.

Analyze and interpret the earnings coverage ratios in (A).

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Summer Peebles, Inc. Consolidated Income Statement ($ thousands)
Year Ending December 31, 2015

Sales

$15,000.00

Undistributed Income of Less Than 50%-Owned Affiliates

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$300.00

Total Revenue

$15,300.00

Cost of Goods Sold

$7,000.00

Selling and Administrative Expenses

$2,000.00

Depreciation

$600.00

Rental Expense

$500.00

Share of Minority Interest in Consolidated Income

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$200.00

Interest Expense

$400.00

-$10,700.00

Income Before Taxes

$4,600.00

Income Taxes

Current

$900.00

Deferred

$400.00

-$1,300.00

Net Income

$3,300.00

Less Dividends

Common Stock

$300.00

Preferred Stock

$400.00

-$700.00

Earnings Retained for the Year

$2,600.00

Additional Information:

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The following changes occurred in current assets and current liabilities for 2015: Current Accounts Increase (Decrease)Current Accounts Increase (Decrease)Accounts Receivable $900.00Notes Payable to Bank-$200.00Inventories-$800.00Accounts Payable $700.00Dividend Payable-$100.00

The effective tax rate is 40%.

Shares of minority interests in consolidated income do not have fixed charges.

Interest expenses include: Interest Incurred (Except Items Below) $600.00Amortization of Bond Premium-$300.00Interest on Capitalized Leases $140.00Interest Incurred $440.00Less Interest Capitalized-$40.00Interest Expense $400.00

Amortization of previously capitalized interest (included in depreciation) is $60.

Interest implicit in operating lease rental payment (included in rental expense) is $120.

Global Campus Ratio Analysis Exercises and Problems

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