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The following financial information is excerpted from the 2012 annual report of Retail Products, Inc.
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?
