Question

Suppose the 2020 adidas financial statements contain the following selected data (in millions). Current assets $4,575 Interest expense $200 Total assets 9,000 Income taxes 178 Current liabilities 3,050 Net income 236 Total liabilities 5,670 Cash 800 Compute the following values. (a) Working capital. $ millions (b) Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) :1 (c) Debt to assets ratio. (Round to 0 decimal places, e.g. 62%.) % (d) Times interest earned.

Answer 1

a. $1,525 million

b. 1.50 times

c. 29 %

Step-by-step explanation:

Working capital = Current Assets - Current Liabilities

= $4,575 million - $3,050 million

= $1,525 million

Current Ratio = Current Assets ÷ Current Liabilities

= $4,575 million ÷ $3,050 million

= 1.50 times

Debt to Asset ratio = Interest bearing Debt / Total Assets × 100

= ($ 5,670 - $3,050) / $9,000 × 100

= 29 %