sst e 3-14. actioncurrent ratio acid- test ratio debt to equity ratio issuance of long-term bonds...
TRANSCRIPT
SST E 3-14
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds
Issuance of short-term notes
Payment of accounts payable
Purchase of inventory on account
Purchase of inventory for cash
Purchase of equipment with a 4-year note
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes
Payment of accounts payable
Purchase of inventory on account
Purchase of inventory for cash
Purchase of equipment with a 4-year note
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable
Purchase of inventory on account
Purchase of inventory for cash
Purchase of equipment with a 4-year note
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account
Purchase of inventory for cash
Purchase of equipment with a 4-year note
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash
Purchase of equipment with a 4-year note
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
N N I
Retirement of bonds
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
N N I
Retirement of bonds D D D
Sale of common stock
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
N N I
Retirement of bonds D D D
Sale of common stock I I D
Write-off of obsolete inventory
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
N N I
Retirement of bonds D D D
Sale of common stock I I D
Write-off of obsolete inventory D N I
Purchase of short-term investment for cash
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
N N I
Retirement of bonds D D D
Sale of common stock I I D
Write-off of obsolete inventory D N I
Purchase of short-term investment for cash
N N N
Decision to refinance on a long-term basis some currently maturing debt
ACTION CURRENT RATIO
ACID-TEST
RATIO
DEBT TO
EQUITY RATIO
Issuance of long-term bonds I I I
Issuance of short-term notes I I I
Payment of accounts payable D D D
Purchase of inventory on account I D I
Purchase of inventory for cash N D N
Purchase of equipment with a 4-year note
N N I
Retirement of bonds D D D
Sale of common stock I I D
Write-off of obsolete inventory D N I
Purchase of short-term investment for cash
N N N
Decision to refinance on a long-term basis some currently maturing debt
I I N
MARRIOTT CASE
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities Accounts payable 697 Accrued payroll and benefits 358 Self-insurance 22 Other payables and accruals 725 Total current liabilities 1,802Long-term debt 2,408Other long-term liabilities 1,012Convertible debt 407 Total long-term liabilities 3,827 Total liabilities 5,629Shareholders' equity Class A common stock, 255.6 million shares issued 3 Additional paid-in capital 3,378 Retained earnings 941 Treasury stock and other -844 Total shareholders’ equity 3,478Total liabilities and shareholders’ equity 9,107
ASSETSCurrent assets Cash and equivalents 817 Accounts and notes receivable 611 Inventories, at lower of average cost or market 96 Prepaid taxes 223 Other 383 Total current assets 2,130Property and equipment 2,930Intangible assets 1,764Investments in affiliates 823Notes and other receivables 1,038Other 422 Total noncurrent assets 6,977Total assets 9,107
L/SE = 1.6185L = 1.6185 SEBy substitution, 2.6185 SE = $9,107
SE = $3,478
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities Accounts payable 697 Accrued payroll and benefits 358 Self-insurance 22 Other payables and accruals 725 Total current liabilities 1,802Long-term debt 2,408Other long-term liabilities 1,012Convertible debt 407 Total long-term liabilities 3,827 Total liabilities 5,629Shareholders' equity Class A common stock, 255.6 million shares issued 3 Additional paid-in capital 3,378 Retained earnings 941 Treasury stock and other -844 Total shareholders’ equity 3,478Total liabilities and shareholders’ equity 9,107
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities Accounts payable 697 Accrued payroll and benefits 358 Self-insurance 22 Other payables and accruals 725 Total current liabilities 1,802Long-term debt 2,408Other long-term liabilities 1,012Convertible debt 407 Total long-term liabilities 3,827 Total liabilities 5,629Shareholders' equity Class A common stock, 255.6 million shares issued 3 Additional paid-in capital 3,378 Retained earnings 941 Treasury stock and other -844 Total shareholders’ equity 3,478Total liabilities and shareholders’ equity 9,107
ASSETSCurrent assets Cash and equivalents 817 Accounts and notes receivable 611 Inventories, at lower of average cost or market 96 Prepaid taxes 223 Other 383 Total current assets 2,130Property and equipment 2,930Intangible assets 1,764Investments in affiliates 823Notes and other receivables 1,038Other 422 Total noncurrent assets 6,977Total assets 9,107
Current ratio = CA/CLCA = Current ratio x CLCA = 1.182 x $1,802
CA = $2,130
ASSETSCurrent assets Cash and equivalents 817 Accounts and notes receivable 611 Inventories, at lower of average cost or market 96 Prepaid taxes 223 Other 383 Total current assets 2,130Property and equipment 2,930Intangible assets 1,764Investments in affiliates 823Notes and other receivables 1,038Other 422 Total noncurrent assets 6,977Total assets 9,107
Acid test ratio = Quick assets/CL= Cash + Acc. & Notes Rec./CL = ($817 + Acc. & Notes Rec.)/$1,802 = 0.7925($817 + Acc. & Notes Rec.)/ = 0.7925 x 1,802 = $1,428
Acc. & Notes Rec. = $1,428 – 817 = $611
ASSETSCurrent assets Cash and equivalents 817 Accounts and notes receivable 611 Inventories, at lower of average cost or market 96 Prepaid taxes 223 Other 383 Total current assets 2,130Property and equipment 2,930Intangible assets 1,764Investments in affiliates 823Notes and other receivables 1,038Other 422 Total noncurrent assets 6,977Total assets 9,107
ASSETSCurrent assets Cash and equivalents 817 Accounts and notes receivable 611 Inventories, at lower of average cost or market 96 Prepaid taxes 223 Other 383 Total current assets 2,130Property and equipment 2,930Intangible assets 1,764Investments in affiliates 823Notes and other receivables 1,038Other 422 Total noncurrent assets 6,977Total assets 9,107
ASSETSCurrent assets Cash and equivalents 817 Accounts and notes receivable 611 Inventories, at lower of average cost or market 96 Prepaid taxes 223 Other 383 Total current assets 2,130Property and equipment 2,930Intangible assets 1,764Investments in affiliates 823Notes and other receivables 1,038Other 422 Total noncurrent assets 6,977Total assets 9,107
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities Accounts payable 697 Accrued payroll and benefits 358 Self-insurance 22 Other payables and accruals 725 Total current liabilities 1,802Long-term debt 2,408Other long-term liabilities 1,012Convertible debt 407 Total long-term liabilities 3,827 Total liabilities 5,629Shareholders' equity Class A common stock, 255.6 million shares issued 3 Additional paid-in capital 3,378 Retained earnings 941 Treasury stock and other -844 Total shareholders’ equity 3,478Total liabilities and shareholders’ equity 9,107
SEARS (A) CASE