Since financial and accounting ratios are the product of the relationship of various financial statement line...

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Since financial and accounting ratios are the product of the relationship of various financial statement line items, it should be possible to recreate financial statements based on ratio results and knowledge of the amounts of a few financial statement line items. The following is a list of ratios that reflect the company's results consistently achieved over recent years. Profit margin on sales Return on assets Gross profit margin Inventory turnover ratio Receivables turnover ratio Acid-test ratio Current ratio Return on equity Debt to equity ratio Times interest earned ratio 6.00% 7.71% 30.00% 10.161 7.531 1.880 2.50 10.00% 0.296 11.72 In the margins of the lists, the following note have been had-written. In the margins of the lists, the following note have been had-written. 27,000 Net income (10,000) Short-term note Prepaid expenses G&A expenses All other curent liabilities are trade accounts. 7,250 16,500 Property, plant, and equipment are the only noncurrent assets. Prior years' depreciation Property, plant, and equipment has an estimated 20 year life. Notes payable are the only noncurrent liabilities. The effective interest rate on short-term notes The effective interest rate on long-term notes No investment securities. Cash balance total 75,000 8% 8% 27,000 Balance Sheet Assets Cash Accounts receivable (net) Inventory Prepaid expenses and other current assets Current assets Property, plant, and equipment, gross less: Accumulated depreciation Property, plant, and equipment, net Total Assets Liabilities and Shareholders' Equity Accounts payable Short-term notes Current liabilities Notes payable Total Liabilities Shareholders' equity Since financial and accounting ratios are the product of the relationship of various financial statement line items, it should be possible to recreate financial statements based on ratio results and knowledge of the amounts of a few financial statement line items. The following is a list of ratios that reflect the company's results consistently achieved over recent years. Profit margin on sales Return on assets Gross profit margin Inventory turnover ratio Receivables turnover ratio Acid-test ratio Current ratio Return on equity Debt to equity ratio Times interest earned ratio 6.00% 7.71% 30.00% 10.161 7.531 1.880 2.50 10.00% 0.296 11.72 In the margins of the lists, the following note have been had-written. In the margins of the lists, the following note have been had-written. 27,000 Net income (10,000) Short-term note Prepaid expenses G&A expenses All other curent liabilities are trade accounts. 7,250 16,500 Property, plant, and equipment are the only noncurrent assets. Prior years' depreciation Property, plant, and equipment has an estimated 20 year life. Notes payable are the only noncurrent liabilities. The effective interest rate on short-term notes The effective interest rate on long-term notes No investment securities. Cash balance total 75,000 8% 8% 27,000 Balance Sheet Assets Cash Accounts receivable (net) Inventory Prepaid expenses and other current assets Current assets Property, plant, and equipment, gross less: Accumulated depreciation Property, plant, and equipment, net Total Assets Liabilities and Shareholders' Equity Accounts payable Short-term notes Current liabilities Notes payable Total Liabilities Shareholders' equity

Answer rating: 100% (QA)

Profit margin on sales Net Income Sales 006 Sales Net income 6 27000 6 450000 Gross Profit margin Gross Profit Sales 30 Gross Profit 450000 x 30 13500... View the full answer