rporation Modern Stores, Inc. 1. Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $15,256 $203,110 2. Total common stockholders' equity. . . . . $3,075 $71,460 3. Operating income. . . . . . . . . . . . . . . . . . . . $1,350 $26,820 4. Interest
rporation Modern Stores, Inc. 1. Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $15,256 $203,110 2. Total common stockholders' equity. . . . . $3,075 $71,460 3. Operating income. . . . . . . . . . . . . . . . . . . . $1,350 $26,820 4. Interest
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4PB
Related questions
Question
Examine the following selected financial information for
Best Value
Corporation and
Modern
Stores, Inc., as of the end of their fiscal years ending in
2018:
Data table
(In millions)
|
Best Value Corporation
|
Modern Stores, Inc.
|
|||||
---|---|---|---|---|---|---|---|
1.
|
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . .
|
$15,256
|
|
$203,110
|
|||
2.
|
Total common
|
$3,075
|
|
$71,460
|
|||
3.
|
Operating income. . . . . . . . . . . . . . . . . . . .
|
$1,350
|
|
$26,820
|
|||
4.
|
Interest expense. . . . . . . . . . . . . . . . . . . . . .
|
$88
|
|
$2,020
|
|||
5.
|
Leverage ratio. . . . . . . . . . . . . . . . . . . . . . . .
|
|
|
|
|||
6.
|
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
|
|
|
|||
7.
|
Debt ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
|
|
|
|||
8.
|
Times interest earned. . . . . . . . . . . . . . . . .
|
|
|
|
|
|
|
Requirements
1.
|
Complete the table, calculating all the requested information for the two companies. Use year-end figures in place of averages where needed for the purpose of calculating the ratios in this exercise.
|
2.
|
Evaluate each company's long-term debt-paying ability (strong, medium, weak).
|
1. Complete the table, calculating all the requested information for the two companies. Use year-end figures in place of averages where needed for the purpose of calculating ratios in this exercise. (Round your answers to two decimal places, X.XX. Enter amounts in millions as provided to you in the problem statement.)
(In millions)
|
Best Value Corporation
|
Modern Stores, Inc.
|
|||||
1.
|
Total assets. . . . . . . . . . . . . . . . .
|
$15,256
|
|
$203,110
|
|||
2.
|
Total Stockholders' equity. . . . . .
|
$3,075
|
|
$71,460
|
|||
3.
|
Operating income. . . . . . . . . . . .
|
$1,350
|
|
$26,820
|
|||
4.
|
Interest expense. . . . . . . . . . . . .
|
$88
|
|
$2,020
|
|||
5.
|
Leverage ratio. . . . . . . . . . . . . . .
|
|
|
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning