Question

Compute the specified ratios using Faustin Company’s balance sheet for 2014.
Assets
Cash .............. $ 18,000
Marketable securities ......... 12,000
Accounts receivable ........ 25,000
Inventory ............ 22,000
Property and equipment ....... 160,000
Accumulated depreciation ....... (37,000)
Total assets ........... $200,000
Liabilities and Stockholders’ Equity
Accounts payable ......... .. $ 11,500
Current notes payable ........ 3,500
Mortgage payable ......... 4,000
Bonds payable ........... 21,500
Common stock .......... 100,000
Retained earnings 5........ 9,500
Total liabilities and stockholders’ equity...$200,000

The average number of common stock shares outstanding during 2014 was 880 shares. Net income for the year was $20,000.

Required
Compute each of the following and round computations to two decimal points:
a. Current ratio
b. Earnings per share
c. Quick (acid-test) ratio
d. Return on investment
e. Return on equity
f. Debt to equity ratio



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  • CreatedFebruary 07, 2014
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