Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Cost Accounting Expert

problem: Springfield Bank is evaluating Creek Enterprises, which has requested a $4,000,000 loan, to assess the company's financial leverage & financial risk. On the basis of the debt ratios for Creek, along with industry averages and Creek's recent financial statements [on the facing page], estimate & recommend appropriate action on the loan request.

Creek Enterprises Income Statement for the Year Ended December 31, 2006

Sales revenue

 

$30,000,000

Less: Cost of goods sold

 

21,000,000

Gross profits

 

$ 9,000,000

Less: Operating expenses

   

Selling expense

$3,000,000

 

General and administrative expenses

1,800,000

 

Lease expense

200,000

 

 

Creek Enterprises Income Statement for the Year Ended December 31, 2006

Depreciation expense

1,000,000

Total operating expense

6,000,000

Operating profits

$ 3,000,000

Less: Interest expense

1,000,000

Net profits before taxes

$ 2,000,000

Less: Taxes (rate = 40%)

800,000

Net profits after taxes

$ 1,200,000

Less: Preferred stock dividends

100,000

Earnings available for common stockholders

$ 1,100,000

 

Creek Enterprises Balance Sheet December 31, 2006

Assets

Liabilities and Stockholders' Equity

Current assets

Current liabilities

Cash

$ 1,000,000

Accounts payable

$ 8,000,000

Marketable securities

3,000,000

Notes payable

8,000,000

Accounts receivable

12,000,000

Accruals

500,000

Inventories

7,500,000

Total current liabilities

$16,500,000

Total current assets

$23,500,000

Long-term debt (includes financial leases)b

$20,000,000

Gross fixed assets (at cost)a

Stockholders' equity

   

Land and buildings

$11,000,000

Preferred stock (25,000 shares,

$ 2,500,000

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922686

Have any Question? 


Related Questions in Cost Accounting

Write 500 words that respond to the following

Write 500 words that respond to the following questions: • Discuss what absorption, variables, and throughput costing are. • Determine when each would be used. • Provide an explanation and example of all three.

Question 1pringle company distributes a single product the

Question 1. Pringle Company distributes a single product. The company's sales and expenses for a recent month follow:   Total    Per Unit   Sales $ 300,000   $ 20        Variable expenses   210,000     14          Contri ...

Cost accounting- little debbie brownieshere is a copy of

Cost Accounting- Little Debbie Brownies Here is a copy of the assignment. My snack of choice is the Little Debbie Fudge Brownies Comprehensive Product Costing Select your favorite drink or snack item manufactured by a pu ...

For your assignment you will apply the fundamental concepts

For your Assignment, you will apply the fundamental concepts of accounting and finance that you are studying to complete several problems indicative to real-world business scenarios and challenges. For this Assignment, t ...

Quiz1 a process cost system would be used for all of the

QUIZ 1 A process cost system would be used for all of the following products except computer chips. chemicals. motion pictures. soft drinks. 2 Differences between a job order cost system and a process cost system include ...

Assignment discussion-cost accumulation systemwhen

Assignment: Discussion-Cost Accumulation System When companies accumulate costs, they generally use either a job-order or a process costing system. The type of system used often varies based on the type of product or ser ...

Assignment cost accountingoverviewthe final project for

Assignment: Cost Accounting Overview The final project for this course is the creation of a quantitative analysis with a memo to management. Classifying a company's costs allows for an in-depth analysis of the impact tha ...

Polarisreading the case and answer the all question polaris

Polaris Reading the case and answer the all question: Polaris: Suggested assignment questions Why does the Polaris outsource the manufacture of most components but in-source final assembly? Which manufacturing location o ...

Assignmentdolan products is a small family owned audio

Assignment Dolan Products is a small, family owned audio component manufacturer. Several years ago, the company decided to concentrate on only three models, which were sold under many brand names to electronic retailers ...

Requirementsdo not use any direct quotes andor cut and

Requirements: Do not use any direct quotes and/or cut and pasted information (i.e. your discussion is to be 100% your thoughts, ideals and insights). A minimum 350 words are required (this is the minimum and totally feel ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen