Use the information from the balance sheet and income statement below to calculate the following ratios: Current
Question:
Use the information from the balance sheet and income statement below to calculate the following ratios:
Current ratio ................................ Days in receivables
Acid-test ratio ...................... Operating return on assets
Times interest earned ................................. Debt ratio
Inventory turnover ............................ Return on equity
Total asset turnover ...................... Fixed-asset turnover
Operating profit margin
Cash ..................................... $100,000
Accounts receivable ..................... 30,000
Inventory ................................. 50,000
Prepaid expenses .........................10,000
Total current assets .................. $190,000
Gross plant and equipment ........... 401,000
Accumulated depreciation ........... (66,000)
Net fixed assets
Total assets ........................... $525,000
Accounts payable ..................... $ 90,000
Accrued liabilities ...................... 63,000
Total current debt ................... $153,000
Long-term debt ....................... 120,000
Common stock ........................ 205,000
Retained earnings ..................... 47,000
Total debt and equity .............. $525,000
Income Statement 1/1/2015 -12/31/2015
Sales* ................................................... $210,000
Cost of goods sold ......................................... (90,000)
Gross profit ............................................ $120,000
Selling, general, and administrative expenses ...... (29,000)
Depreciation expense ................................... (26,000)
Operating profits .................................... $ 65,000
Interest expense ........................................ (8,000)
Earnings before taxes ................................. $57,000
Taxes .................................................. (16,000)
Net income .......................................... $ 41,000
* 12% of sales are cash sales.
Asset TurnoverAsset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Given data ASSETS Cash 100000 Accounts receivable 30000 Inventory 50000 Prepaid expenses 10000 To...View the full answer
Foundations Of Finance
ISBN: 9780134083285
9th Edition
Authors: Arthur J. Keown, John H. Martin, J. William Petty
