Calculate the term debt and capital lease coverage

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Reference no: EM132489873

Use the following information for Fanny Farms to answer the following Questions:

Question 1. Prepare 2009 and 2010 common-size balance sheets for Fanny Farms.

Question 2. Prepare 2009 and 2010 common-size income statements for Fanny Farms.

Question 3. Compute ROFA, ROFE and COFD for 2010.

Question 4. Calculate two liquidity ratios and one solvency ratio for Fanny Farms for 2009 and 2010. Has liquidity increased or decreased from 2009 to 2004? Has solvency increased or decreased from 2009 to 2010?

Question 5. Calculate the term debt and capital lease coverage ratio and the capital replacement and term debt repayment margin for 2010.

Question 6. Calculate the four operational efficiency ratios for Fanny Farms for 2010

Balance Sheet

                                                    2009                                            2010

ASSETS

Current Assets

Cash and equivalents                        $ 1,000                               $ 1,200

Grain and livestock inventory               60,000                               40,000

Other current farm assets                     1,000                                1,000

Total current assets                             62,000                             42,200

Noncurrent Assets

Machinery and equipment                     100,000                           110,000

Buildings                                              20,000                           18,000

Land                                                  300,000                          290,000

Other noncurrent farm assets                 15,000                            15,000

Total noncurrent assets                        435,000                          433,000

Total Farm Assets                              $ 497,000                       $ 475,200

LIABILITIES

Current Liabilities

Notes payable                                  $ 15,500                        $ 10,550

Accounts payable                                  2,325                            1,582

Current portion of term debt                     12,000                        14,000

Other current farm liabilities                      15,000                       20,000

Total current liabilities                            44,825                        46,132

Noncurrent Liabilities

Deferred portion of term debt               150,000                             136,000

Total noncurrent liabilities

Total Farm Liabilities                            194,825                          182,132

Total Net Worth                                     302,175                      293,068

Total Liabilities and Net Worth                  $ 497,000                  $ 475,200

INCOME STATEMENT

Value of farm production                     $ 139,160                       $ 160,034

Nondepreciation operating expenses        76,538                           79,321

Depreciation                                       15,000                            16,000

Interest expense                                    14,571                         14,570

Net farm income from operations               33,051                           50,143

OTHER INFORMATION

Family living withdrawals                           $ 25,000                  $ 25,700

Nonfarm income                                                0                        0

Income tax expense                                  9,091                         6,700

Other income from farm assets                      0                                 0

Principal payments on current

portions of term debt and capital leases      12,000                          14,000

Interest payments on term debt and capital leases 13,500                         12,240

Reference no: EM132489873

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