Question

Financial statement data of Style Travel magazine include the following information ­ (dollars in thousands):
Cash.......................................................................................................... $ 24,500
Accounts receivable, net.......................................................................... $ 83,000
Inventories................................................................................................ $ 180,500
Total assets............................................................................................... $ 660,000
Short- term notes payable........................................................................ $ 49,500
Accounts payable..................................................................................... $ 106,000
Accrued liabilities..................................................................................... $ 44,500
Long- term liabilities.................................................................................. $ 182,800
Net income............................................................................................... $ 81,000
Common shares outstanding................................................................... 60,000

Requirements
1. Compute Style Travel’s current ratio, debt ratio, and earnings per share. Round all ­ratios to two decimal places.
2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Purchased inventory on account, $ 75,000
b. Borrowed $ 264,000 on a long- term note payable
c. Issued 7,500 shares of common stock, receiving cash of $ 210,000
d. Received cash on account, $ 21,000




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  • CreatedAugust 27, 2014
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