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Use the Financial Information Below to Calculate and Interpret the Following

question 41

Essay

Use the financial information below to calculate and interpret the following:
A.Capital acquisitions ratio.
B.Times interest earned ratio.
C.Quality of income ratio.
 Sales revenue $159,131 Cost of goods sold 64,360 Gross profit 94,771 Selling, general and administrative expenses 8,800 Amortization 2,585 Total operating expenses 11,385 Operating income 83,386 Interest expense 2,847 Net income before taxes 80,539 Income tax expense 3,414 Net income $77,125\begin{array}{ll}\text { Sales revenue } & \$ 159,131 \\\text { Cost of goods sold } & 64,360 \\ \text { Gross profit } & 94,771\\\text { Selling, general and administrative expenses }&8,800\\\text { Amortization }&2,585\\\text { Total operating expenses }&11,385\\\text { Operating income } & 83,386 \\\text { Interest expense } & 2,847\\\text { Net income before taxes }&80,539\\\text { Income tax expense }&3,414\\\text { Net income }&\$77,125\end{array} Cash used for interest payments $2,847\quad\quad\quad\$ 2,847
Cash used for income tax payments $3,414\quad\quad \$ 3,414  Net income $77,125 Add amortization 2,585 Add the decrease in accounts receivable 8,860 Add the decrease in inventory 367 Subtract the increase in prepaid expenses (650) Subtract the decrease in accounts payable (1,202) Net cash provided by operating activities $87,085\begin{array} { l r } \text { Net income } & \$ 77,125 \\\text { Add amortization } & 2,585 \\\text { Add the decrease in accounts receivable } & 8,860 \\\text { Add the decrease in inventory } & 367 \\\text { Subtract the increase in prepaid expenses } & ( 650 ) \\\text { Subtract the decrease in accounts payable } & ( 1,202 ) \\\text { Net cash provided by operating activities } & \$ 87,085\end{array}  Cash provided by sale of property, plant, and equipment $1,165 Cash provided by sale of short-term investments 1,393 Cash used for purchases of property, plant, and  equipment (8,950) Cash used for purchases of short-term investments (778) Net cash provided by (used for) investing activities ($7,170)\begin{array}{lr}\text { Cash provided by sale of property, plant, and equipment }&\$1,165\\\text { Cash provided by sale of short-term investments }&1,393\\\text { Cash used for purchases of property, plant, and }\\\text { equipment }&(8,950)\\\text { Cash used for purchases of short-term investments }&(778)\\\text { Net cash provided by (used for) investing activities }&(\$7,170)\end{array}


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