Financial information for M & M Company is presented below M&M COMPANY Balance Sheet December 31,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Financial information for M & M Company is presented below M&M COMPANY Balance Sheet December 31, 2020 and 2019 Assets Cash Short-term investments Account receivable 108,000 Less: Allowance for Doubtful Accounts (10,000) Inventory Prepaid expenses Land Equipment Less: Accumulated depreciation Total assets Liabilities and Stockholders' Equity Short-term notes payable Account payable Accrued liabilities Bonds payable Stockholders' Equity Share capital-ordinary ($5 par) Retained earnings Total liabilities and stockholders' equity 520,000 (340,000) 2020 $70,000 $52,000 98,000 125,000 29000 130,000 180,000 $684,000 $102,000 48,000 50,000 150,000 200,000 134,000 $684,000 $115,000 (35,000) 560,000 (385,000) 2019 $65,000 $40,000 80,000 135,000 23,000 130,000 175,000 $648,000 $100,000 42,000 40,000 150,000 200,000 116,000 $648,000 Sales Less: Sales Returns and Allowances Net Sales Less: Cost of goods sold Gross Profit Operating Expenses M & M COMPANY Income Statement For Year Ended December 31, 2020 Selling and administrative expenses Interest expense Total operating expenses Income before taxes Income tax expense Net income $900,000 $50,000 $850,000 6. Assets turnover 7. Profit margin 8. Return on ordinary equity 9. Earnings per share $620,000 $230,000 158,000 8,000 $166,000 64,000 21,000 $43,000 All sales were on account. Market price of common stock at the end of December 2020 is $12.8 per share. Required: a. Compute the following ratios for 2020: (12 marks) 1. Current ratio 2. Acid-test ratio 3. Account receivable turnover 4. Average collection period 5. Inventory turnover 10. Pay-out ratio 11. Times Interest Earned 12. Debts to assets ratio b. Explain the meaning of these two ratios from the results you found in (a): Current ratio, and Times Interest Earned (2 marks) Financial information for M & M Company is presented below M&M COMPANY Balance Sheet December 31, 2020 and 2019 Assets Cash Short-term investments Account receivable 108,000 Less: Allowance for Doubtful Accounts (10,000) Inventory Prepaid expenses Land Equipment Less: Accumulated depreciation Total assets Liabilities and Stockholders' Equity Short-term notes payable Account payable Accrued liabilities Bonds payable Stockholders' Equity Share capital-ordinary ($5 par) Retained earnings Total liabilities and stockholders' equity 520,000 (340,000) 2020 $70,000 $52,000 98,000 125,000 29000 130,000 180,000 $684,000 $102,000 48,000 50,000 150,000 200,000 134,000 $684,000 $115,000 (35,000) 560,000 (385,000) 2019 $65,000 $40,000 80,000 135,000 23,000 130,000 175,000 $648,000 $100,000 42,000 40,000 150,000 200,000 116,000 $648,000 Sales Less: Sales Returns and Allowances Net Sales Less: Cost of goods sold Gross Profit Operating Expenses M & M COMPANY Income Statement For Year Ended December 31, 2020 Selling and administrative expenses Interest expense Total operating expenses Income before taxes Income tax expense Net income $900,000 $50,000 $850,000 6. Assets turnover 7. Profit margin 8. Return on ordinary equity 9. Earnings per share $620,000 $230,000 158,000 8,000 $166,000 64,000 21,000 $43,000 All sales were on account. Market price of common stock at the end of December 2020 is $12.8 per share. Required: a. Compute the following ratios for 2020: (12 marks) 1. Current ratio 2. Acid-test ratio 3. Account receivable turnover 4. Average collection period 5. Inventory turnover 10. Pay-out ratio 11. Times Interest Earned 12. Debts to assets ratio b. Explain the meaning of these two ratios from the results you found in (a): Current ratio, and Times Interest Earned (2 marks)
Expert Answer:
Answer rating: 100% (QA)
Compute the following ratios for 20201 Current ratio 1 Current ratio Current assets Current liabilities Current ratio 684000 102000 Current ratio 669 ... View the full answer
Related Book For
Exploring Management
ISBN: 978-1119231936
5th edition
Authors: John R. Schermerhorn, Daniel G. Bachrach
Posted Date:
Students also viewed these general management questions
-
Compare sweepstakes, contests, and games in terms of how they function and their relative effectiveness.
-
What difference does a leader make in terms of how innovative an organization becomes?
-
What can you conclude from these results?
-
Matrix squaring. Write a program like Markov that computes page ranks by repeatedly squaring the matrix, thus computing the sequence p, p 2 , p 4 , p 8 , p 16 , and so forth. Verify that all of the...
-
On January 3, 2014, Mega Limited purchased 3,000 shares (30%) of the common shares of Sonja Corp. for $438,000. The following information is provided about the identifiable assets and liabilities of...
-
Exercise 6.27 introduces data from a random sample of 170 married couples in Britain, where both partners' ages are below 65 years, and fits a model predicting wife's age from husband's age. Wife's...
-
What are the advantages and disadvantages of certified environmental product declarations? Assuming that you are the environmental manager of Global Autos, with companies operating in Sweden,...
-
Aretail store in Des Moines, Iowa, receives shipments of a particular product from Kansas City and Minneapolis. Let x = units of product received from Kansas City y = units of product received from...
-
The following is a partial trial balance for the Green Star Corporation as of December 31, 2024: Account Title Sales revenue Interest revenue Debits Credits $ 1,300,000 33,000 53,000 Gain on sale of...
-
For this exercise, we use JTRAIN.RAW to determine the effect of the job training grant on hours of job training per employee. The basic model for the three years is hrsempit = (0 + (1td88t + (2d89, +...
-
A comparative study on Consumer perception regarding public and private sector banks with specific reference to hdfc / sbi
-
How does climate change influence geotechnical engineering practices, particularly in coastal and flood-prone regions ?
-
2 M5-2 (Static) Identifying Internal Controls over Financial Reporting [LO 5-2, LO 5-3] ook Fox Erasing has a system of internal control with the following procedures. Match the procedure to the...
-
1 . Identify at least four different areas where there could be potential accounting fraud in a company. Make sure you elaborate on your reasoning for why accounting fraud could occur as well as the...
-
A student is wrapping presents to earn spending money. The student can wrap 25 presents in 1 hour 40 minutes. What is the student's productivity?
-
What innovative techniques are being used in geotechnical engineering to improve soil stabilization and reduce the risk of landslides or other geological hazards ?
-
You have been recently appointed as the Senior Financial Accountant at University of Zululand (hereafter "UNIZULU"), a South African public institution of higher learning. The University's current...
-
For a Poisson process of rate , the Bernoulli arrival approximation assumes that in any very small interval of length , there is either 0 arrivals with probability 1- or 1 arrival with probability ....
-
How can alternative work schedules work to the benefit of both organizations and their members?
-
Why are both position power and personal power essential in management?
-
Is it possible to develop programmed decisions for use in conditions of risk and uncertainty?
-
Burgers \& Fries, Inc., is authorized to issue an unlimited number of common shares and 10,000 preferred shares. During its first year, the business completed the following share issuance...
-
Citadel Sporting Goods is authorized to issue 5,000 preferred shares and 10,000 common shares. During a two-month period, Citadel completed these share-issuance transactions: Prepare the...
-
Sagebrush Software Lid. had the following selected account balances at December 31, 2020 (in thousands). Prepare the shareholders' equity section of Sagebrush Software's balance sheet (in thousands)....
Study smarter with the SolutionInn App