Below are the financial statements of Coco Stationary Statement of Comprehensive Income for the Year ended 31 December 2017 $$ Sales 305,830Cost of goods sold 210,935Depreciation 26,850Earnings before interest and taxes 68,045Interest paid 11,930Taxable income 56,115Taxes (35%) 19,640Net income 36,475Dividends 20,000 Retained earnings 16,475 Coco StationaryStatement of Financial Position as at 31 December 2017 $Net plant and equipment260,525Cash22,050Accounts receivable13,850Inventory24,650Total current assets60,550Total assets321,075Ordinary shares25,000Retained earnings167,840Total owners' equity192,840Long term debt85,000Accounts payable22,850Notes payable9,000Other11,385Total current liabilities43,235Total liabilities after owners' equity321,075Calculate the following financial ratios as at 31 December 2017a. Liquidity ratios:1) Current Ratio2) Quick Ratiob. Activity ratios:1) Total asset turnover2) Inventory turnover3) Receiveables turnoverc. Debt ratios:1) Debt-equity ratio2) Equity multiplier3) Times interest earned4) Cash coverage ratiod. Profitability ratios:1) Net Profit margin2) Return on assets3) Return on equity

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Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 46E

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Below are the financial statements of Coco Stationary

Statement of Comprehensive Income for the Year ended 31 December 2017

	$	$
Sales			305,830
Cost of goods sold			210,935
Depreciation			26,850
Earnings before interest and taxes			68,045
Interest paid			11,930
Taxable income			56,115
Taxes (35%)			19,640
Net income			36,475
Dividends		20,000
Retained earnings		16,475

Coco Stationary

Statement of Financial Position as at 31 December 2017

	$
Net plant and equipment	260,525
Cash	22,050
Accounts receivable	13,850
Inventory	24,650
Total current assets	60,550
Total assets	321,075
Ordinary shares	25,000
Retained earnings	167,840
Total owners' equity	192,840
Long term debt	85,000
Accounts payable	22,850
Notes payable	9,000
Other	11,385
Total current liabilities	43,235
Total liabilities after owners' equity	321,075

Calculate the following financial ratios as at 31 December 2017

a. Liquidity ratios:

1) Current Ratio

2) Quick Ratio

b. Activity ratios:

1) Total asset turnover

2) Inventory turnover

3) Receiveables turnover

c. Debt ratios:

1) Debt-equity ratio

2) Equity multiplier

3) Times interest earned

4) Cash coverage ratio

d. Profitability ratios:

1) Net Profit margin

2) Return on assets

3) Return on equity

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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