A recent balance sheet of Save-A-Lot Supplies is provided as follows. Other information provided by the company
Question:
A recent balance sheet of Save-A-Lot Supplies is provided as follows.
Other information provided by the company is as follows.
Compute and discuss briefly the significance of the following measures as they relate to Save-A Lot Supplies.
a. Net income percentage in current year.
b. Return on equity in current year.
c. Working capital on December 31, current year.
d. Current ratio on December 31, current year.
SAVE-A-LOT SUPPLIES BALANCE SHEET DECEMBER 31, CURRENT YEAR Assets Liabilities Stockholders' Equity Cash..... Accounts receivable.. Office supplies.. Prepaid rent... Equipment .. Accumulated depreciation: equipment.. Total assets. Accounts payable.... Income taxes payable.. Total llabilities... Capital stock..... Retained earnings.. Total stockholders' equity. Total llabilitles and stockholders' equity $ 28,800 (11,520) $16,320 17,280 720 4,080 $17,280 $55,680 $5,280 4,320 $ 9,600 $24,000 22,080 $46,080 $55,680
Step by Step Answer:
a Net Income 15300 Total Revenue 61200 25 Significance All companies must consume resources incur co...View the full answer
Financial And Managerial Accounting The Basis For Business Decisions
ISBN: 9781260247930
19th Edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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