The financial statements of Sol Company appear below: Sol COMPANY Comparative Statements of Financial Position December 31,
Question:
The financial statements of Sol Company appear below:
Sol COMPANY
Comparative Statements of Financial Position
December 31, 2017
————————————————————————————————————————
Assets 2017 2016
Property, plant and equipment (net).................................................. $260,000 $300,000
Inventory............................................................................................ 50,000 70,000
Accounts receivable (net).................................................................. 50,000 30,000
Short-term investments..................................................................... 15,000 60,000
Cash................................................................................................... 25,000 40,000
Total assets ................................................................................ $400,000 $500,000
Equity and liabilities
Share capital – ordinary.................................................................... $150,000 $150,000
Retained earnings.............................................................................. 110,000 70,000
Bonds payable................................................................................... 80,000 160,000
Accounts payable.............................................................................. 20,000 30,000
Short-term notes payable.................................................................. 40,000 90,000
Total equity and liabilities ........................................................... $400,000 $500,000
GROGAN COMPANY
Income Statement
For the Year Ended December 31, 2017
Net sales............................................................................................ $400,000
Cost of goods sold............................................................................. 240,000
Gross profit........................................................................................ 160,000
Operating expenses........................................................................... 42,000
Income from operations..................................................................... 118,000
Interest expense................................................................................ 18,000
Income before income taxes............................................................. 100,000
Income tax expense.......................................................................... 30,000
Net income........................................................................................ $ 70,000
Additional information:
a. Cash dividends of $23,000 were declared and paid in 2017.
b. Weighted-average number of ordinary shares outstanding during 2017 was 30,000 shares.
c. Market value of ordinary shares on December 31, 2017, was $21 per share.
Instructions
Using the financial statements and additional information, compute the following ratios for Grogan Company for 2017.Show all computations.
1. Current ratio _________.
2. Return on ordinary shareholders' equity _________.
3. Price-earnings ratio _________.
4. Acid-test ratio _________.
5. Accounts receivable turnover _________.
6. Times interest earned _________.
7. Profit margin _________.
8. Days in inventory _________.
9. Payout ratio _________.
10. Return on assets _________.
Expert Answer:
aCurrent Ratio Current Ratio Total Current Assets Total Current Liabilities 50000 50000 15000 25000 ... View the full answer
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
