Net Devices Inc $\text { ASEETS (\$in thousands) }$ $\text { LIABLIIES ( \$ in thousands) }$

question 94

Multiple Choice

Net Devices Inc. The following balance sheets and income statements are for Net Devices Inc., a manufacturer of small electronic devices, including calculators, personal digital assistants and mp3 players. For purposes of these questions assume that the company has an effective tax rate of 35%.
BALANCE SHEETS
\ $\text { ASEETS (\$in thousands) }$


$\begin{array}{c}\begin{array}{lll}\text { Fiscal year end}\\ \text { Cash}\\ \text { Marketable securities}\\ \text { Receivables}\\ \text { Inventories}\\ \text { Other current assets}\\ \text { Total current assets}\\\\ \text { Property, plant \& equipment}\\\\ \text { Intangibles}\\ \text { Deposits \& other assets}\\ \text { Total assets} \end{array}\begin{array}{l}2011 \\\$ 875,650 \\6,560 \\771,580 \\1,320,150 \\\underline{249,000}\\{3,222,940} \\\\1,118,750 \\\\263,050 \\\underline{184,500}\\\underline{\$ 4,789,240} \end{array}\begin{array}{l}2010 \\\$ 571,250 \\0 \\775,250 \\1,254,600 \\\underline{231,200}\\2,832,300 \\\\1,100,300 \\\\241,000 \\\underline{168,250}\\\underline{ \$ 4,341,850} \end{array}\begin{array}{l}2009 \\\$ 154,230 \\0 \\902,000 \\1,418,500 \\\underline{229,900}\\{2,704,630} \\\\1,122,400 \\\\215,600 \\\underline{168,900}\\\underline{\$ 4211530} \end{array}\end{array}$

$\text { LIABLIIES ( \$ in thousands) }$

$\begin{array}{c}\begin{array}{lll}\text {Fiscal year end}\\\text {Accounts payable}\\\text {Current long term debt}\\\text {Acculed expenses}\\\text {Income taxespayable}\\\text {Other curent liabilities}\\\text {Total current liabilities}\\\\\text {Long term debt}\\\text {Other long term liabilities}\\\text {Total liabilities}\\\\\text {Preferred stock}\\\text {Common stock net}\\\text {Adchtional Paid-in Capital}\\\text {Retained earnings}\\\text {Treasuy stock}\\\text {Shareholders' equity}\\\\\text {Total Liab \& Equity} \end{array}\begin{array}{l}2011 \\\$ 1,178,540 \\18,100 \\664,100 \\138,900 \\\underline{\quad0}\\{1,999,640} \\\\478,250 \\\underline{13,350}\\{2,491,240} \\\\850,000 \\ 4,000 \\869,000 \\1,430,500 \\\underline{(855,500) }\\\underline{2,298,000} \\\\\underline{\$ 4789240} \\ \end{array}\begin{array}{l}2010 \\\$ 1,061,100 \\316,500 \\615,900 \\108,400 \\\underline{\quad0}\\{2,101,900} \\\\378,400 \\\underline{\quad0}\\{2,480,300} \\\\850,000 \\3,950 \\758,000 \\1,055,000 \\\underline{(805,400) }\\\underline{1,861,550} \\\\ \underline{\$ 4,341,850} \end{array}\begin{array}{l}2009 \\\$ 1,138,250 \\150,900 \\585,400 \\38,200 \\\underline{\quad0}\\1,912,750 \\\\599,630 \\\underline{\quad0}\\ 2,512,380 \\\\550,000 \\3,800 \\689,500 \\1,245,050 \\\underline{(789,200) } \\\underline{ 1,699,150}\\\\\underline{\$4,211,530} \end{array}\end{array}$

$\text { INCOME S'TATEMENTS (\$ in thousands) }$

$\begin{array}{c}\begin{array}{lll}\text {Fiscal year end}\\\text {Net sales}\\\text {Cost of Goods Sold}\\\text {Grosspiofit}\\\\\text {Selling, general \& admin. Exp.}\\\text { Income before deprec. \& amort.}\\\\\text {Depreciation \& amortization }\\\text {Interest expense}\\\\\text {Income before tax}\\\text {Provision for income taxes}\\\text {Minority interest}\\\\\text {Net income}\\\\\text {Outstanding shares(in thousands) }\\\text {Preferred Dividends (in thousands) }\end{array}\begin{array}{l}2011 \\\$ 11,455,500\\\underline{(8,026,450) }\\{3,429,050} \\\\\underline{(1,836,400) }\\{1,592,650} \\\\\text { (785,250) } \\\underline{(46,195) }\\\\761,205 \\(157,725) \\\underline{\quad\quad--}\\\\\underline{\$603,480 }\\\\308,515 \\\$85,000 \end{array}\begin{array}{l}2010 \\\$ 11,082,100 \\\underline{(7,940,065}\\{3,142,035} \\\\\underline{(1,789,200) }\\{1,352,835} \\\\(757,250) \\\underline{(43,340} \\\\552,245 \\(112,290) \\\underline{\quad\quad--}\\\\\underline{\$439,955}\\\\303,095\\\$85,000 \end{array}\end{array}$
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Refer to the information for Net Devices Inc. What is Net Devices' capital structure leverage ratio for 2011?

• A) 3.89
• B) 1.68
• C) 3.71
• D) 10.32

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Definitions:

Bank Reconciliation

The process of comparing and adjusting the balance shown in a company’s bank statement, as compared to the company’s own financial records.

Journal Entries

The basic method used in accounting to record transactions, involving debits and credits to appropriate accounts.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities or equity on a company's balance sheet.

Bank Statement

A document issued by a bank detailing the transactions in an account over a specific period, showing deposits, withdrawals, and balances.