Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 6.18E
Solvency Analyses. The following items are from the financial statements of Tall Oak Company.
| Item | 2019 | 2018 |
| Total liabilities | $450,000 | $414,000 |
| Total |
634,000 | 621,000 |
| Net income | 63,000 | 61,000 |
| Tax expense | 18,900 | 18,300 |
| Interest expense | 13,500 | 12,420 |
| Interest paid | 12,100 | 13,660 |
Compute Tall Oak’s debt-to-equity ratio and interest coverage ratio for 2018 and 2019 Comment on Tall Oak’s solvency and changes in solvency from 2018 to 2019.
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