Ratio Computations and Discussion Costner Company has been operating for several years, and on December 31, 2010,

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Ratio Computations and Discussion Costner Company has been operating for several years, and on December 31, 2010, presented the following balance sheet. The net income for 2010 was $25,000. Assume that total assets are the same in 2009 and 2010. Compute each of the following ratios. For each of the four indicate the manner in which it is computed and its significance as a tool in the analysis of the financial soundness of the company.

(a) Current ratio.

(b) Acid-test ratio.

(d) Rate of return onassets.

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a b Current ratio Current Assets Current Liabilities 210000 70000 300 Current ratio measures ...View the full answer

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Intermediate Accounting

ISBN: 978-0470423684

13th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

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Question Posted: Feb 17, 2011 06:01 AM

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Ratio Computations and Discussion Costner Company has been operating for several years, and on December 31, 2010,

Question:

COSTNER COMPANY BALANCE SHEET DECEMBER 31, 2010 Accounts payable Mortgage payable Common stock ($1 Retained earnings $ 40,000 75,000 95,000 Cash Receivables $ 70,000 160,000 Inventories pan Plant assets (net) 220,000 60,000 $430,000 $430,000

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a b Current ratio Current Assets Current Liabilities 210000 70000 300 Current ratio measures ...View the full answer

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