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Perform the calculation for each ratio, and provide an explanation of the result. a. Return on equity b. Total assets turnover c. Return on assets d. Current ratio e. Receivables turnover

Perform the calculation for each ratio, and provide an explanation of the result. a. Return on equity b. Total assets turnover c. Return on assets d. Current ratio e. Receivables turnover

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 92.3C
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Perform the calculation for each ratio, and provide an explanation of the result.

a. Return on equity
b. Total assets turnover
c. Return on assets
d. Current ratio
e. Receivables turnover

Big Rock Paving Company Assets Liabilities Current Assets: Current Liabilities: Cash 500,000 Accounts Payable 300,000 Notes Payable 700,000 500,000 Accounts Receivable Inventory 800,000 Total Current Assets 1,300,000 Total Current Liabilities 1,200,000 Owners' Equity: 2,200,000 Common Stock ($1 Par) 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Owners' Equity Fixed Assets: Property, Plant & Equipment Less: Accumulated Depreciation 600,000 100,000 100,000 Net Fixed Assets Total Assets 800,000 Total Liabilities and Owners' 2,900,000 Equity Big Rock Paving Company Income Statement for Year Ending December 31, 2021 Sales 3,400,000 Less: Cost of Goods Sold 2,700,000 Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense 700,000 682.000 (682,000) 120.000 (802,000) (280,000) (522,000) Taxable Income Less: Taxes Net Income Dividends Addition to Retained Earnings (522,000)
Transcribed Image Text:Big Rock Paving Company Assets Liabilities Current Assets: Current Liabilities: Cash 500,000 Accounts Payable 300,000 Notes Payable 700,000 500,000 Accounts Receivable Inventory 800,000 Total Current Assets 1,300,000 Total Current Liabilities 1,200,000 Owners' Equity: 2,200,000 Common Stock ($1 Par) 600,000 Capital Surplus 1,600,000 Retained Earnings 2,900,000 Total Owners' Equity Fixed Assets: Property, Plant & Equipment Less: Accumulated Depreciation 600,000 100,000 100,000 Net Fixed Assets Total Assets 800,000 Total Liabilities and Owners' 2,900,000 Equity Big Rock Paving Company Income Statement for Year Ending December 31, 2021 Sales 3,400,000 Less: Cost of Goods Sold 2,700,000 Less: Administrative Expenses Less Depreciation Earnings Before Interest and Taxes Less: Interest Expense 700,000 682.000 (682,000) 120.000 (802,000) (280,000) (522,000) Taxable Income Less: Taxes Net Income Dividends Addition to Retained Earnings (522,000)
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