Rhodes Bakery The balance sheet taken from the company's 2020 10-K is provided below:

Question

 December 31
Assets:2020
2019
Current Assets:   Cash$   61,100
$54,000
 Accounts Receivable22,500
17,500
 Inventory8,500
7,000
 Other Current Assets       6,500
    5,500
 Total Current Assets98,600
84,000
Long-term Assets:   Property, Plant & Equipment, net744,900
25,000
 Intangible Assets     211,250
  225,000
Total Assets$1,054,750
$334,000
    Liabilities and Stockholders' Equity  Current Liabilities:   Accounts Payable$     5,500
$    4,500
 Interest Payable500
500
 Current Portion of Long-Term Debt15,000
0
 Income Tax Payable       18,500
    23,000
 Total Current Liabilities$     39,500
28,000
Long-term Liabilities:   Notes Payable     246,250
    15,000
 Total Liabilities285,750
43,000
Stockholders' Equity   Common Stock60,000
35,000
 Additional Paid-in Capital654,000
186,000
 Retained Earnings92,500
70,000
 Treasury Stock     (37,500)
             0
 Total Stockholders' Equity  769,000
  291,000
Total Liabilities and Stockholders' Equity$1,054,750
$334,000
Refer to Rhodes Bakery. Calculate the following debt management ratios for 2020 and 2019: Times Interest Earned Ratio, Long-Term Debt-to-Equity Ratio, Debt-to-Equity Ratio, Long-Term Debt-to-Assets Ratio, and Debt-to-Assets Ratio. Income from operations were $65,000 and $49,000 and interest expense was $26,000 and $1,750 for 2020 and 2019, respectively. Round your answers to two decimal places.  Comment on the company's debt management.

What will be an ideal response?

Answer 1