The financial information below presents selected information from the financial statements of Johnson Tools,Inc.for the year ended December 31,2008.
Calculate the:
A.Times interest earned ratio
B.Capital acquisitions ratio
C.Quality of income ratio
Comment on each of these ratios.
Sales revenue Cost of goods sold Interest expense Net income Accounts receivable 12/31/07 Accounts payable 12/31/07 Cash paid for income taxes Cash flows from operating activities Cash flows from financing activitics $43,84335,6612,7841,2462,8956,5435203,797(2,702) Amortization expense Selling, general & administrative expenses Income tax expense Gross profit Accounts receivable 12/31/08 Accounts payable 12/31/08 Interest paid to creditors Cash paid for property, plant, and equipment Cash flows from investing activitics $8832,7844858,1822,6367,5192,5003,100(2,260)
Learn how the net present value (NPV) is determined and its implications for capital budgeting decisions.
Comprehend the significance of the minimum required rate of return in project evaluation.
Grasp the principles and limitations of the payback method in project assessment.
Recognize the assumptions underlying the internal rate of return and net present value methods regarding reinvestment rates.
Definitions:
Sensory Adaptation
A change in the responsiveness of the sensory system based on the average level of surrounding stimulation.
Auditory Cortex
The region of the brain that is responsible for processing auditory information, located in the temporal lobe.
Sensation
The process of receiving stimulus energies from the external environment and transforming those energies into neural energy.
Cerebral Cortex
The outer layer of neural tissue of the cerebrum of the brain, involved in multiple high-level functions like perception, thought, and memory.