Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,193 Cost of goods sold 4,060 Other expenses 4,049 Depreciation 2,518 Earnings before interest and taxes (EBIT) $ 2,566 Interest expense 685 Income before tax $ 1,881 Taxes (at 35%) 658 Net income $ 1,223 Dividends $ 856

To calculate the following financial ratios for Phone Corporation using 365 days in a year,

a.Return on capital =  10.20%

b.Total debt ratio = 0.65

c.Times interest earned = 3.75

d.Cash coverage ratio = 7.42

Explanation:

a) For return on capital

Return on Capital = NI + Interest x (1-tax) average capital

= [1223 + (1 - 35%) x 685] / [(7018 + 6833 + 9724 + 9121) / 2]

= 10.20%

b) For Total debt

Total debt / Total asset

= (4794 + 7018 + 6178) / 27714

= 0.65

c) Times interest earned

EBIT / interest expense

= 2566 / 685

= 3.75

d) Cash Coverage ratio

(EBIT + Depreciation) / Interest Expense

= (2566 + 2518) / 685

= 7.42

250 tickets needs to be sold.

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.