Reading 27: Analysis of Financial Statements: A Synthesis center, border, balance

yangh

 

Q3. Consider the balance sheet shown below for the Starburst Corporation:

Starburst Corporation Balance Sheet ($ millions)
Assets		Liabilities & Owners’ Equity
Cash	$20	Accounts payable	$30
Marketable securities	10	Notes payable	10
Accounts receivable	40	Total current liabilities	$40
Inventories	80
Total current assets	$150	Long-term debt	$120
		Common stock	40
Net property, plant, & equipment (P,P&E)	$230	Retained earnings	200
Intangible assets	20	Total stockholders’ equity	$240
Total assets	$400	Total liabilities & equity	$400

Footnotes to Starburst’s financial statements include the following information:

• Inventories are valued at cost as determined by the last in, first out (LIFO) method. The LIFO reserve is $10 million.
• Additional operating facilities and equipment are financed with operating leases that have a present value of $20 million.
• Intangible assets represent $4 million of goodwill from previous acquisitions.
• Due to a decrease in interest rates, Starburst’s long-term debt has a current market value of $150 million.

Which of the following is closest to Starburst’s total debt-to-equity ratio after making the necessary balance sheet adjustments?

A)   0.97.

B)   0.64.

C)   0.45.

 

suodi

[em50]

vinthus

aaa

maxsimax

thanks

jrxx99

踩踩踩踩踩踩踩踩踩踩踩踩

rosemarie

[em50]

twinsen1

thanks

hartzhou

thx

tongxiaoman

?

tommyyxh

gsfdgdsg