Kaufman Company’s balance sheet follows.
|
Assets |
|
|
Current assets |
|
|
Cash |
$13,445 |
|
Short term investments—at cost (approximate market) |
5,239 |
|
Trade accounts receivable, less allowance of $1,590 |
88,337 |
|
Inventories—at lower of cost (average method) or market: |
|
|
Finished merchandise |
113,879 |
|
Work in process, raw materials, and supplies |
47,036 |
|
160,915 |
|
|
Prepaid expenses |
8,221 |
|
Total current assets |
276,157 |
|
Other assets: |
|
|
Receivables, advances, and other assets |
4,473 |
|
Intangibles |
2,324 |
|
Total other assets |
6,797 |
|
Property, plant, and equipment: |
|
|
Land |
5,981 |
|
Buildings |
78,908 |
|
Machinery and equipment |
162,425 |
|
247,314 |
|
|
Less allowances for depreciation |
106,067 |
|
Net property, plant, and equipment |
141,247 |
|
Total assets |
$424,201 |
|
Liabilities and Shareholders’ Equity |
|
|
Current liabilities: |
|
|
Notes payable |
$2,817 |
|
Trade accounts payable |
23,720 |
|
Pension, interest, and other accruals |
33,219 |
|
Taxes, other than income taxes |
4,736 |
|
Income taxes |
3,409 |
|
Total current liabilities |
67,901 |
|
Long term debt, 12% debentures |
86,235 |
|
Deferred income taxes |
8,768 |
|
Minority interest in subsidiaries |
12,075 |
|
Total liabilities |
174,979 |
|
Stockholders’ equity: |
|
|
Serial preferred |
9,154 |
|
Common $5.25 par value |
33,540 |
|
Additional paid in capital |
3,506 |
|
Retained earnings |
203,712 |
|
249,912 |
|
|
Less cost of common shares in treasury |
690 |
|
Total shareholders’ equity |
249,222 |
|
Total liabilities and shareholders’ equity |
$424,201 |
Required
a. Compute the debt ratio.
b. Compute the debt/equity ratio.
c. Compute the ratio of total debt to tangible net worth.
d. Comment on the amount of debt that Kaufman Company has.