Accounting Essay Example | Topics and Well Written Essays - 750 words - 4

Accounting - Essay Examplethat would be distributed to holders of each share of common stock if all assets were sold at their balance sheet carrying amounts by and by all the creditors were paid off. Book value per share is based entirely on historical costs.The coin bank should not approve a five-year $500,000 loan to Stephens confederacy due to the times interest earned and debt-equity ratios. Stephens Companys times interest earned ratio is 3.5, lower than Stephens manufacturing (5). Also, the debt-to-equity ratio is 1.036, greater than 0.8 (industry ratio). Both of these figures show that the company earnings are lower than competitors and also that the company relies too very much on loans or debt. The veritable ratio is higher than competitors and the acid-test ratio is lower than the industry average. Most of the current assets are inventory and prepaid expenses, which cannot be converted to money quickly. The gross margin is lower than the industry average and the abilit y of company to generate profit is low. This company does not have good prospects the large