Chapter 9 Acct

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Return on assets

Net Income / Avg Total assets

Formula Return on shareholder Equity

Net Income / Avg shareholders' equity

Methods of long-term financing with Debt

Notes payable Leases Bonds

The debt to equity ratio

Total Liab / Total Stockholders' equity

Market Interest rate

Yield rate Effective interest rate

A series of equal amounts paid or received over equal time periods

Annuity

Corporation that wishes to borrow from the general public rather than a bank

BONDs

Mixed of debt financing and equity financing

Capital Structure

Time Interest Earned

EBIT / Interest Expense

Two types of Financing

Equity and Debt

Liang Corporation issues a $100000 bond at a discount for $95083 The coupon rate is 10% and the effective interest rate is 12% The bonds pay interest semiannually on June 30 and December 31. The journal entry to record the interest payment on June 30

Interest expense ( 95083 * 6%) - Cash Interest paid ( 100000 * 5%) = Discount $705

Callable bonds can be redeemed

bond issuer

Bonds

most common form of corporate debt


Ensembles d'études connexes

Longitudinal and cross-sectional studies

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