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Cash 1,500.00 Marketable Securities 2,500.00 Accounts Receivable 15,000.00 Inventory 33,000.00 Toatl Current Assets 52,000.00 Fixed Assets (net) 35,000.00 Total Assets 87,000.00 Liabilities & Stockholders Equity Accounts Payable Notes Payable 12,500.00 12,500.00 Total current liabilities 25,000.00 Long Term Debt 22,000.00 Total Liabilities 47,000.00 Commaon Stock 5,000.00 Contributed Capital Retained Eamings 18,000.00 17,000.00 Total Stockholders equity Total Liabilities & Stockholders equity 40,000.00 87,000.00 Sales 130,000.00 Cost of Sales 103,000.00 Gross Margin 27,000.00 Operating Expenses 16,000.00 11,000.00 Earning before interest and taxes Interest Expense 3,000.00 Earnings before taxes Income Tax 8,000.00 3,000.00 Eamings after taxes 5,000.00 Using the statements provided above... Calculate the following liquidity ratios: Current ratio Quick ratio Calculate the following asset management ratios: Average collection period Inventory turnover Fixed asset turnover Total asset turnover Calculate the following financial leverage ratios Debt to equity ratio Long-term debt to equity Calculate the following profitability ratios: Gross profit margin Net profit margin Return on investment Return on stockholders’ equity

Cash 1,500.00 Marketable Securities 2,500.00 Accounts Receivable 15,000.00 Inventory 33,000.00 Toatl Current Assets 52,000.00 Fixed Assets (net) 35,000.00 Total Assets 87,000.00 Liabilities & Stockholders Equity Accounts Payable Notes Payable 12,500.00 12,500.00 Total current liabilities 25,000.00 Long Term Debt 22,000.00 Total Liabilities 47,000.00 Commaon Stock 5,000.00 Contributed Capital Retained Eamings 18,000.00 17,000.00 Total Stockholders equity Total Liabilities & Stockholders equity 40,000.00 87,000.00 Sales 130,000.00 Cost of Sales 103,000.00 Gross Margin 27,000.00 Operating Expenses 16,000.00 11,000.00 Earning before interest and taxes Interest Expense 3,000.00 Earnings before taxes Income Tax 8,000.00 3,000.00 Eamings after taxes 5,000.00 Using the statements provided above... Calculate the following liquidity ratios: Current ratio Quick ratio Calculate the following asset management ratios: Average collection period Inventory turnover Fixed asset turnover Total asset turnover Calculate the following financial leverage ratios Debt to equity ratio Long-term debt to equity Calculate the following profitability ratios: Gross profit margin Net profit margin Return on investment Return on stockholders’ equity

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 10MCQ
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Using the statements provided

Calculate the following liquidity ratios:

Current ratio

Quick ratio

 

Calculate the following asset management ratios:

Average collection period

Inventory turnover

Fixed asset turnover

Total asset turnover

 

Calculate the following financial leverage ratios

Debt to equity ratio

Long-term debt to equity

 

Calculate the following profitability ratios:

Gross profit margin

Net profit margin

Return on assets

Return on stockholders’ equity

 

For example: you should present it like the text, or as:Gross margin  = 1,933 divided by 8,689 = 22.2%

 

 

A competitor of ACME has for the same time period reported the following three ratios:

 

Current ratio                                1.52
Long-term debt to equity             .25 or 25%
Net profit margin                         .08 or 8%

 

Given these three ratios only which company is performing better on each ratio? Also overall who would you say has the best financial performance and position. Support your answer.

Cash 1,500.00 Marketable Securities 2,500.00 Accounts Receivable 15,000.00 Inventory 33,000.00 Toatl Current Assets 52,000.00 Fixed Assets (net) 35,000.00 Total Assets 87,000.00 Liabilities & Stockholders Equity Accounts Payable Notes Payable 12,500.00 12,500.00 Total current liabilities 25,000.00 Long Term Debt 22,000.00 Total Liabilities 47,000.00 Commaon Stock 5,000.00 Contributed Capital Retained Eamings 18,000.00 17,000.00 Total Stockholders equity Total Liabilities & Stockholders equity 40,000.00 87,000.00 Sales 130,000.00 Cost of Sales 103,000.00 Gross Marg 27,000.00 Operating Expenses 16,000.00 11,000.00 Earning before interest and taxes Interest Expense 3,000.00 Earnings before taxes Income Tax 8,000.00 3,000.00 Earmings after taxes 5,000.00 Using the statements provided above... Calculate the following liquidity ratios: Current ratio Quick ratio Calculate the following asset management ratios: Average collection period Inventory turnover Fixed asset turnover Total asset turnover Calculate the following financial leverage ratios Debt to equity ratio Long-term debt to equity Calculate the following profitability ratios: Gross profit margin Net profit margin Return on investment Return on stockholders' equity
Transcribed Image Text:Cash 1,500.00 Marketable Securities 2,500.00 Accounts Receivable 15,000.00 Inventory 33,000.00 Toatl Current Assets 52,000.00 Fixed Assets (net) 35,000.00 Total Assets 87,000.00 Liabilities & Stockholders Equity Accounts Payable Notes Payable 12,500.00 12,500.00 Total current liabilities 25,000.00 Long Term Debt 22,000.00 Total Liabilities 47,000.00 Commaon Stock 5,000.00 Contributed Capital Retained Eamings 18,000.00 17,000.00 Total Stockholders equity Total Liabilities & Stockholders equity 40,000.00 87,000.00 Sales 130,000.00 Cost of Sales 103,000.00 Gross Marg 27,000.00 Operating Expenses 16,000.00 11,000.00 Earning before interest and taxes Interest Expense 3,000.00 Earnings before taxes Income Tax 8,000.00 3,000.00 Earmings after taxes 5,000.00 Using the statements provided above... Calculate the following liquidity ratios: Current ratio Quick ratio Calculate the following asset management ratios: Average collection period Inventory turnover Fixed asset turnover Total asset turnover Calculate the following financial leverage ratios Debt to equity ratio Long-term debt to equity Calculate the following profitability ratios: Gross profit margin Net profit margin Return on investment Return on stockholders' equity
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ISBN:
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