LooseLeaf for College Accounting: A Contemporary Approach
4th Edition
ISBN: 9781259995057
Author: M. David Haddock Jr. Professor, John Ellis Price, Michael Farina
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 13, Problem 18DQ
Gomez Company had a
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Earnings per share (EPS) is an accounting ratio used to indicate the profitability of a company. In 2018, Alita's Company had an EPS of 1.25. However, in 2019, the EPS was 0.54. What does this fall in EPS indicate? Also, comment on the performance of the company.
The following financial information is for Cullumber Company.
CULLUMBER COMPANY
Balance Sheets
December 31
Assets
2022
2021
Cash
$ 70,000
$64,000
Debt investments (short-term)
53,000
39,000
Accounts receivable
108,000
90,000
Inventory
229,000
162,000
Prepaid expenses
30,000
25,000
Land
130,000
130,000
Building and equipment (net)
264,000
185,000
Total assets
$884,000
$695,000
Liabilities and Stockholders' Equity
Notes payable
$172,000
$102,000
Accounts payable
65,000
51,000
Accrued liabilities
41,000
41,000
Bonds payable, due 2025
250,000
172,000
Common stock, $10 par
202,000
202,000
Retained earnings
154,000
127,000
Total liabilities and stockholders' equity
$884,000
$695,000
CULLUMBER COMPANY
Income Statements
For the Years Ended December 31
2022
2021
Sales revenue
$890,000
$786,000
Cost of goods sold
641,000
575,000
Gross profit
249,000
211,000
Operating expenses
194,000
159,000
$ 5000
$ 52,000
Net income
Additional information:
Inventory at the beginning of 2021 was $116,000.
1.
2.…
a) Evaluate the company’s liquidity and financial flexibility by calculating and analysing the following ratios for 2019.
(i) Current ratio at December 31.
(ii) Acid-test ratio at December 31.
(iii)Accounts receivable turnover.
(iv) Inventory turnover.
(v) Return on assets.
(vi) Profit margin on sales.
Chapter 13 Solutions
LooseLeaf for College Accounting: A Contemporary Approach
Ch. 13 - Why are financial statements prepared in...Ch. 13 - What is the distinction between current...Ch. 13 - Prob. 1.3SRQCh. 13 - Which of the following is not a current asset? a....Ch. 13 - How should purchases returns and allowances be...Ch. 13 - Assume that a business listed the Freight In...Ch. 13 - Why do adjusting entries need detailed...Ch. 13 - Which adjusting entries should be reversed?Ch. 13 - Prob. 2.3SRQCh. 13 - A reversing entry is made for an end-of-period...
Ch. 13 - Prob. 2.5SRECh. 13 - At the end of the previous accounting period, an...Ch. 13 - Prob. 1CSRCh. 13 - Prob. 2CSRCh. 13 - Prob. 3CSRCh. 13 - Prob. 4CSRCh. 13 - Which of the following should have a debit balance...Ch. 13 - Prob. 6CSRCh. 13 - Prob. 7CSRCh. 13 - Prob. 1DQCh. 13 - Prob. 2DQCh. 13 - What are operating expenses?Ch. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQCh. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 14DQCh. 13 - Prob. 15DQCh. 13 - Prob. 16DQCh. 13 - Prob. 17DQCh. 13 - Gomez Company had a current ratio of 2.0 in 2018...Ch. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - The worksheet of Bridgets Office Supplies contains...Ch. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - The Adjusted Trial Balance section of the...Ch. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Superior Hardwood Company distributes hardwood...Ch. 13 - Good to Go Auto Products distributes automobile...Ch. 13 - Obtain all data necessary from the worksheet...Ch. 13 - Obtain all data that is necessary from the...Ch. 13 - Prob. 5PACh. 13 - ComputerGeeks.com is a retail store that sells...Ch. 13 - Hog Wild is a retail firm that sells motorcycles,...Ch. 13 - Prob. 3PBCh. 13 - Prob. 4PBCh. 13 - The data below concerns adjustments to be made at...Ch. 13 - Programs Plus is a retail firm that sells computer...Ch. 13 - Teagan Fitzgerald is the owner of Newport Jewelry,...Ch. 13 - Prob. 1MFCh. 13 - Spectrum Company had an increase in sales and net...Ch. 13 - Prob. 3MFCh. 13 - Prob. 4MFCh. 13 - Prob. 5MFCh. 13 - Prob. 6MFCh. 13 - Prob. 7MFCh. 13 - It is standard accounting procedures, or GAAP, to...Ch. 13 - McCormick Company, Incorporated, is a global...Ch. 13 - The Fashion Rack is a retail merchandising...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Based on table below , is your company doing better or worse than last year? Explain your answer. 2019 2018 Ratio Category 1. Current ratio 0.67 0.64 Liquidity 2. Quick ratio / Acid-test ratio 0.58 0.54 Liquidity 3. Accounts receivable turnover 27.12 n/a Liquidity 4. Days' sales uncollected 17.70 9.40 Liquidity 5. Equity ratio 38% 38% Solvency 6. Debt ratio 62% 62% Solvency 7. Debt-to-equity ratio 1.63 1.66 Solvency 6. Gross Margin Ratio 13% 15% Profitability 9. Profit margin ratio 10.00% 11.22% Profitability 10. Total asset turnover 0.86 n/a Liquidity 11. Return on total assets 9% n/a Profitability 12. Return on common stockholders' equity 23% n/a Profitabilityarrow_forwardCalculate following ratios If you are not able to calculate with the given the information shown, indicate what is missing. After calculating each ratio indicate whether the trend from 2017 to 2018 is good or bad and why. Year 2018 Year 2017 Net Profit Margin Total Asset turnover Debt to Tangible Net Worth Ratio Operating Cash Flow / Total Debtarrow_forwardCalculate the financial ratios of Spinneys in 2022 and 2021. Analyze the change between the years 2022 and 2021 in terms of financial ratios. Which financial ratios would you check to evaluate the performance of inventory management and cash management? Which year is better in terms of inventory management and cash management?arrow_forward
- Examine the financial data of Black Corporation. Show how to compute Black's current ratio from 2018 to 2020. Is the company's ability to pay its current liabilities improving or deteriorating? (Click the icon to view the balance sheet.) (Round ratios to two decimal places.) Formula: 2018 2019 2020 Black's ability to pay its current liabilities is II 11 Current ratioarrow_forwardA) Calculate the following liquidity ratios for 2020. 1. Working capital- 2.Current Ratio- 3. Acid test ratio- 4. Accounts receivable turnover- B) calculate the following liquidity ratios for 2020. 1. Average collection period (in days)- 2. Inventory turnover (in times)- C) calculate the average days to sell inventory for 2020. 1. Average days to sell inventory-arrow_forwardByers Company presents the following condensed income statement for 2019 and condensed December 31, 2019, balance sheet: Compute the following ratios for Byers ( round all computations to two decimals): ( 1) earnings per share, ( 2) gross profit margin, ( 3) operating profit margin, ( 4) net profit margin, ( 5) total asset turnover, ( 6) return on assets, (7) return on common equity, (8) receivables turnover (in days), and (9 ) interest coverage.arrow_forward
- 1. Compute the following ratios for the comparative periods (2018 and 2019). The company used 365 days in its computation for some of the ratios. Show your solution. d. Accounts Receivable Turnover Ratio e. Average Collection Period f. Inventory Turnover Ratio g. Average Days in Inventory h. Number of days in Operating Cycle i. Debt to Total Assets Ratio j. Debt to Equity Ratio k. Times Interest Earned Ratio l. Gross Profit Ratio m. Profit Margin Ratio n. Return on Assets o. Return on Equity p. Assets Turnover Ratioarrow_forwardAfter reviewing the information, calculate the following ratios for Nestlé for 2021:1) Inventory turnover2) Profit margin3) Return on assets4) Free cash flowRound all answers to two decimal places.arrow_forwardSwifty Incorporated had average total assets in 2025 of $6343000. It reported sales for of $8209000 that year. Average liabilities for the year were $5187000. Net income for the year was $964136. What is Swifty' return on assets for 2025? O 15.20% 18.59% O 11.74% 6.60%arrow_forward
- Calculation and interpretation of ratios. Data for White Star Limited: Net operating profit after tax is $25 million (2018: $38 million). 1. Use the information above to calculate for 2019 and 2018: a working capital b current ratio c quick ratio d debt-to-equity ratio e return on equity ratio f earnings per share ratio. 2. Identify two warning signals that could have negative implications with respect to the company ’ s ability to generate cash flows to meet its future needs. In each case, explain why the signal you have identified could reflect a cash flow problem. 3. At the annual general meeting of White Star, the managing director, Ms Rose Dawson, made the following statement: ‘ Recently a number of articles in the financial press have questioned the financial position of our company. This criticism is totally unjustified. Net profit was $25 million and total assets have increased by $160 million. These results show that 2019 was a very successful year for White Star. ’ Comment on…arrow_forwardMVP Company has below ratios for the year 2021: ROA = 10% Current Ratio = 2:1 What is the effect of the following transactions on the above ratios? ( DECREASE, INCREASE, NO EFFECT)arrow_forwardThe following data are taken from the financial statements of Sheffield Company. Accounts receivable (net), end of year Net sales on account Terms for all sales are 1/10, n/45 (a1) X Your answer is incorrect. 2022 $555,000 3,997,500 2021 $470,000 3,122,250 Compute for each year the accounts receivable turnover. At the end of 2020, accounts receivable (net) was $435,000. (Round answers to 1 decimal place, e.g. 1.6.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License