Help calculating the following ratios: return on equity current ratio quick ratio debt-to-equity times interest earned

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.4.13P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...
icon
Related questions
Question

Help calculating the following ratios:

  • return on equity
  • current ratio
  • quick ratio
  • debt-to-equity
  • times interest earned
INCOME STATEMENT
2020
revenues (all A/R)
1000
COGS
400
gross profit
600
operating expenses
200
EBIT
400
interest expense
200
EBT
200
tax expense
100
net income
100
STATEMENT of RE
beginning retained eamings
450
net income
100
dividends
50
ending retained earnings
500
cash
200
A/R
100
inventory
200
current assets
500
long-term assets
2500
total assets
3000
BALANCE SHEET
current liabilities
200
long-term liab
1800
total liabilities
2000
common stock
500
retained earnings
500
1000
common equity
total liabilities & 0/E
3000
Transcribed Image Text:INCOME STATEMENT 2020 revenues (all A/R) 1000 COGS 400 gross profit 600 operating expenses 200 EBIT 400 interest expense 200 EBT 200 tax expense 100 net income 100 STATEMENT of RE beginning retained eamings 450 net income 100 dividends 50 ending retained earnings 500 cash 200 A/R 100 inventory 200 current assets 500 long-term assets 2500 total assets 3000 BALANCE SHEET current liabilities 200 long-term liab 1800 total liabilities 2000 common stock 500 retained earnings 500 1000 common equity total liabilities & 0/E 3000
Expert Solution
Step 1 Using the following formulas

ROE = Earning available to Equity shareholders * 100/ Equity shareholders fund

Current Ratio = Current Assets / Current Liabilities

Quick Ratio = (Current Assets – Inventories – Prepaids)/ Current Liabilities

Debt to Equity = Debt / Equity

Times Interest Earned = EBITDA / Interest Expenses

 

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning