B-16.02 Problem

B-16.02 Problem - Use the accompanying data set to...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
B-16.02 Billy Covington is a loan analyst for DotBanc. DotBanc accepts online business loan applications. The data are stored in a spreadsheet ("data set"). Billy imports this data into an analysis spreadsheet and calculates the debt to total assets ratio, debt to stockholders' equity ratio, and times interest earned ratio. The calculated ratios are used to screen applicants for further evaluation. To qualify, a company must have a debt to total assets ratio of less than 0.5, debt to total equity of less than 1.0, and a times interest earned ratio of at least 5. In calculating the ratios, DotBanc makes certain assumptions as follows: Total equity is the sum of paid-in capital and retained earnings. Total assets equal total equity plus total liabilities. Total interest cost is 7% of total liabilities.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Use the accompanying data set to calculate the indicated ratios. Identify companies that meet the preliminary screening. DATA SET B-16.02 DATA SET Applicant Total Liabilities Paid-in Capital Retained Earnings Net Income for Past Year Taxes for Past Year Berkley 5,000,000 2,000,000 2,000,000 1,000,000 250,000 Costnor 2,500,000 1,000,000 500,000 400,000 100,000 Dalia 3,000,000 400,000 5,200,000 500,000 110,000 Fergusen 500,000 700,000 3,500,000 800,000 90,000 Hernandez 2,000,000 200,000 700,000 600,000 75,000 Indio 1,600,000 1,200,000 8,000,000 250,000 50,000 Jordanson 4,400,000 5,000,000 (400,000) (60,000)-Kervin 3,000,000 1,500,000 1,800,000 10,000 1,000 Lensmire 600,000 500,000 500,000 250,000 60,000...
View Full Document

{[ snackBarMessage ]}

Page1 / 2

B-16.02 Problem - Use the accompanying data set to...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online