Long-Term Solvency Ratios Summary data from year-end financial statements of Palm Springs Company for the current year follow. Summary Income Statement Data Sales $10, 500, 600 Cost of goods sold 6,050,000 Selling expenses 685,000 Administrative expenses 945,000 Interest expense 783, 500 Income tax expense 427,791 8,891,291 Net income $1,609,309 Summary Balance Sheet Data Cash $84, 700 Total liabilities $749,700 Noncash assets 885,500 Stockholders' equity 220, 500 Total assets $970, 200 Total liabilities and equity $970, 200 Round answers to one decimal place. a. Compute the ratio of times - interest - earned. Answer times b. Compute the debt-to-equity ratio. Answer

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Long-Term Solvency Ratios Summary data from year-end financial statements of Palm Springs Company for the current
year follow. Summary Income Statement Data Sales $10, 500, 600 Cost of goods sold 6, 050,000 Selling expenses
685,000 Administrative expenses 945,000 Interest expense 783, 500 Income tax expense 427,791 8,891,291 Net
income $1,609,309 Summary Balance Sheet Data Cash $84, 700 Total liabilities $749,700 Noncash assets 885,500
Stockholders' equity 220, 500 Total assets $970, 200 Total liabilities and equity $970, 200 Round answers to one decimal
place. a. Compute the ratio of times - interest - earned. Answer times b. Compute the debt-to-equity ratio. Answer
Transcribed Image Text:Long-Term Solvency Ratios Summary data from year-end financial statements of Palm Springs Company for the current year follow. Summary Income Statement Data Sales $10, 500, 600 Cost of goods sold 6, 050,000 Selling expenses 685,000 Administrative expenses 945,000 Interest expense 783, 500 Income tax expense 427,791 8,891,291 Net income $1,609,309 Summary Balance Sheet Data Cash $84, 700 Total liabilities $749,700 Noncash assets 885,500 Stockholders' equity 220, 500 Total assets $970, 200 Total liabilities and equity $970, 200 Round answers to one decimal place. a. Compute the ratio of times - interest - earned. Answer times b. Compute the debt-to-equity ratio. Answer
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