Z Your answer is partially correct. Try again. Indicate, by using ratios, the change in liquidity...

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Z Your answer is partially correct. Try again. Indicate, by using ratios, the change in liquidity and profitability of Messersmith Company from 2016 to 2017. (Round Earnings per share to 2 decimal places, e.g. 1.65, and all other answers to 1 decimal place, e.g. 6.8 or 6.8% .) Change 2016 2017 LIQUIDITY Current 1.88 :1 1.88 :1 No change + Acid-test 1.14 :1 1.26 :1 Increase + Increase Accounts receivable turnover 9.4 times 9.55 times T Inventory turnover 4.55 times 4.77 times Increase + PROFITABILITY Profit margin 5.23 % 5.06 % Decrease Asset turnover 1.24 times 1.28 times Increase + Return on assets 6.57 % % Decrease + 6.46 Earnings per share 2.10 2.15 | Increase SHOW SOLUTION SHOW ANSWER LINK ΤOΤΕXΤ Financial information for Messersmith Company is presented below. MESSERSMITH COMPANY Balance Sheets December 31 Assets 2017 2016 Cash $ 133,000 $ 123,500 Short-term investments 98,800 76,000 Accounts receivable (net) 186,200 152,000 Inventory Prepaid expenses 237,500 256,500 55,100 43,700 Land 247,000 247,000 Building and equipment (net) 342,000 332,500 $1,299,600 $1,231,200 Liabilities and Stockholders' Equity Notes payable Accounts payable $190,000 $190,000 91,200 79,800 Accrued liabilities 95,000 76,000 Bonds payable, due 2020 285,000 285,000 Common stock, $10 par 380,000 380,000 Retained earnings 258,400 220,400 $1,299,600 $1,231,200 $1,299,600 $1,231,200 MESSERSMITH COMPANY Income Statement For the Years Ended December 31 2017 2016 Net sales $1,615,000 $1,501,000 Cost of goods sold 1,178,000 1,092,500 Gross profit 437,000 408,500 Operating expenses 355,300 328,700 Net income $ 81,700 $ 79,800 Additional information: 1. Inventory at the beginning of 2016 was $224,200. 2. Total assets at the beginning of 2016 were $1,197,000. No common stock transactions occurred during 2016 or 2017. All sales were on account. Accounts receivable, net at the beginning of 2016 were $167,200. 3. 4. 5. Notes payable are classified as current liabilities. Attempts: 3 of 3 used udy v (b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2017, and (2) as of December 31, 2018, after giving effect to the situation. Net income for 2018 was $95,000. Total assets on December 31, 2018, were $1,330,000. (Round answers to 1 decimal place, e.g. 6.8 or 6.8% .) Situation Ratio (1) 34,200 shares of common stock were sold at par on July 1, 2018. (2) All of the notes payable were paid in 2018. The only change in liabilities was that the notes payable were paid. Return on common stockholders' equity Debt to assets ratio (3) Market price common stock was $17 on December 31, 2017, and $24.32 on December 31, 2018. Price-earnings ratio 2017 2018 Change Return on common stockholders' equity % % Debt to assets % Price-earnings ratio times times LINK TO TEXT Attempts: of 3 used SAVE FOR LATER SUBMIT ANSWER Z Your answer is partially correct. Try again. Indicate, by using ratios, the change in liquidity and profitability of Messersmith Company from 2016 to 2017. (Round Earnings per share to 2 decimal places, e.g. 1.65, and all other answers to 1 decimal place, e.g. 6.8 or 6.8% .) Change 2016 2017 LIQUIDITY Current 1.88 :1 1.88 :1 No change + Acid-test 1.14 :1 1.26 :1 Increase + Increase Accounts receivable turnover 9.4 times 9.55 times T Inventory turnover 4.55 times 4.77 times Increase + PROFITABILITY Profit margin 5.23 % 5.06 % Decrease Asset turnover 1.24 times 1.28 times Increase + Return on assets 6.57 % % Decrease + 6.46 Earnings per share 2.10 2.15 | Increase SHOW SOLUTION SHOW ANSWER LINK ΤOΤΕXΤ Financial information for Messersmith Company is presented below. MESSERSMITH COMPANY Balance Sheets December 31 Assets 2017 2016 Cash $ 133,000 $ 123,500 Short-term investments 98,800 76,000 Accounts receivable (net) 186,200 152,000 Inventory Prepaid expenses 237,500 256,500 55,100 43,700 Land 247,000 247,000 Building and equipment (net) 342,000 332,500 $1,299,600 $1,231,200 Liabilities and Stockholders' Equity Notes payable Accounts payable $190,000 $190,000 91,200 79,800 Accrued liabilities 95,000 76,000 Bonds payable, due 2020 285,000 285,000 Common stock, $10 par 380,000 380,000 Retained earnings 258,400 220,400 $1,299,600 $1,231,200 $1,299,600 $1,231,200 MESSERSMITH COMPANY Income Statement For the Years Ended December 31 2017 2016 Net sales $1,615,000 $1,501,000 Cost of goods sold 1,178,000 1,092,500 Gross profit 437,000 408,500 Operating expenses 355,300 328,700 Net income $ 81,700 $ 79,800 Additional information: 1. Inventory at the beginning of 2016 was $224,200. 2. Total assets at the beginning of 2016 were $1,197,000. No common stock transactions occurred during 2016 or 2017. All sales were on account. Accounts receivable, net at the beginning of 2016 were $167,200. 3. 4. 5. Notes payable are classified as current liabilities. Attempts: 3 of 3 used udy v (b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2017, and (2) as of December 31, 2018, after giving effect to the situation. Net income for 2018 was $95,000. Total assets on December 31, 2018, were $1,330,000. (Round answers to 1 decimal place, e.g. 6.8 or 6.8% .) Situation Ratio (1) 34,200 shares of common stock were sold at par on July 1, 2018. (2) All of the notes payable were paid in 2018. The only change in liabilities was that the notes payable were paid. Return on common stockholders' equity Debt to assets ratio (3) Market price common stock was $17 on December 31, 2017, and $24.32 on December 31, 2018. Price-earnings ratio 2017 2018 Change Return on common stockholders' equity % % Debt to assets % Price-earnings ratio times times LINK TO TEXT Attempts: of 3 used SAVE FOR LATER SUBMIT ANSWER

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Answer Acid Test Ratio Cash Short term Investments Accounts receivab... View the full answer