Given the Following Information for the Siri Company, Calculate the Ratios

question 25

Essay

Given the following information for the Siri Company, calculate the ratios as requested.
$\begin{array}{lll}&\text { December } 31, & \text { December } 31, \\&\text { Year } 1 & \text { Year } 2\\\text { Current assets } & \$ 100,000 & \$ 150,000 \\\text { Noncurrent assets } & 400,000 & 500,000 \\\text { Current liabilities } & 50,000 & 100,000 \\\text { Long-term debt } & 300,000 & 300,000 \\\text { Common stock, } 10,000 \text { shares } & 100,000 & 100,000 \\\text { Retained earmings } & 50,000 & 150,000\end{array}$

$\begin{array}{lc}&\text { Year } 2\\\text { Net income } & \$ 100,000 \\\text { Interest expense } & 40,000 \\\text { Income taxes } & 30,000 \\\text { Total revenues } & 1,000,000\end{array}$

a. Interest coverage ratio
b. Long-term debt ratio at December 31, Year 2
c. Total assets tumover

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and direct labor.

Gross Margin

The difference between revenue and the cost of goods sold, often expressed as a percentage of revenue, indicating the efficiency of a company in managing its production costs.

Relevant Range

The span of operations in which the beliefs regarding variable and fixed cost dynamics are accurate.

Product Costs

Costs directly associated with the production of goods, including direct labor, materials, and manufacturing overhead.