Question

Compute the specified ratios using the following December 31, 2014, statement of financial position for Palmer Company.
Assets
Cash ............... $ 90,000
Marketable securities ......... 10,000
Accounts receivable .......... 120,000
Inventory ............. 160,000
Property and equipment ......... 250,000
Accumulated depreciation ........ (50,000)
Total assets .............. $580,000
Liabilities and Stockholders’ Equity
Accounts payable ........... $ 86,000
Current notes payable ......... 4,000
Mortgage payable .......... 130,000
Bonds payable ............ 82,000
Common stock ............ 200,000
Retained earnings ............ 78,000
Total liabilities and stockholders’ equity ... $580,000

The average number of common shares outstanding during 2014 was 1,500. Net income for the year was $60,000.

Required
Compute each of the following and round computations to two decimal points.
a. Current ratio
b. Earnings per share
c. 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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