Final Exam fee.docx - ACC/MGT 545 Financial Accounting and...

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ACC/MGT 545 – Financial Accounting and Analysis Final Exam Instructions: Answer all of the five problems. Be sure to answer each question completely. Note any assumptions that you might make. Give examples where appropriate. Each question is worth 16 points and the Group Assignment is worth 20 points (Total Final Exam Grades: Project 20 + 5 X 16 = 100%). 1. The following financial information is excerpted from the 2012 annual report of Retail Products, Inc. Balance Sheet (in thousands) 2012 2011 Current assets $ 449,195 $ 433,049 Investments 32,822 55,072 Deferred charges 4,905 12,769 Property, plant, and equipment, net 350,921 403,128 Trademarks and leaseholds 45,031 47,004 Excess of cost over fair market value of net assets acquired 272,146 276,639 Assets held for disposal 6,062 10,247 $1,161,082 $1,237,908 Total liabilities $ 689,535 $ 721,149 Total stockholders' equity 471,547 516,759 $1,161,082 $1,237,908 Income Statement Net sales $2,020,526 $1,841,738 Cost of goods sold (2,018,436) (1,787,126) Selling and administrative (300,000) (250,000) Interest expense (40,000 ) (30,000 ) Net income (loss) $ (337,910 ) $ (225,388 ) Required: a. For each year compute: 1. Times interest earned 2. Debt ratio 3. Debt/equity ratio 4. Debt to tangible net worth ratio b. Comment on the results. c. Does a times interest earned ratio of less than 1 to 1 mean that the firm cannot pay its interest expense?
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