(1) Introduction: Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio , quick ratio etc. To calculate: Current ratio.

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Answer 1

Question

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

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Required 1. Compute each year’s current ratio. Round ratios to one decimal. 2. Express the income statement data in common-size percents. Round percents to two decimals. 3. Express the balance sheet data in trend percents with 2017 as the base year. Round percents to two decimals. Analysis Component 4. Comment on any significant relations revealed by the ratios and percents computed.

= The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Prime Fish Balance sheet Cash Accounts receivable (net) Inventory Property & equipment (net) Other assets Total assets Current liabilities Long-term debt (interest rate: 15%) Capital stock ($10 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders' equity Income statement Sales revenue (1/2 on credit) Cost of goods sold Operating expenses Net income Other data Per share stock price at end of current year Blue Water $ 42,300 44,500 92,500 159,500 85,300 $ 424,100 $ 92,500 74,100 157,100 30,300 70,100 $ 424,100 $ 427,500 (234,500) (163,600) $ 29,400 $ 23.3 45% $ 19,700 34,900 47,800 416,600 318,000 $ 34,300 $ 837,000 $ 68,500 62,600 525,000 107,300 73,600 $ 837,000 $ 789,000 (401,300) (312,300) $ 75,400 $28 45% Average income tax rate Dividends declared and paid in current year Both companies are in the fish catching and manufacturing business.…

Instructions Using the financial statements and additional information, compute the following ratios for the El Camino Company for 2021. Show all computations. Computations 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio 4. Inventory turnover 5. Accounts receivable turnover 6. Times interest earned 7. Profit margin 8. Days in inventory 9. Payout ratio 10. Return on assets

Answer 2

Question

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

Answer 6

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

Answer 7

Chapter 13, Problem 2PSA

To determine

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

Answer 8

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

Answer 9

To determine

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

Answer 10

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

Answer 11

To determine

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

Answer 12

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

Answer 13

To determine

(4)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To comment:

On the significant relations revealed by the ratios and percent computed.

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 13 - Prob. 1MCQ Ch. 13 - Prob. 2MCQ Ch. 13 - Prob. 3MCQ Ch. 13 - Prob. 4MCQ Ch. 13 - Prob. 5MCQ Ch. 13 - Prob. 1DQ Ch. 13 - Prob. 2DQ Ch. 13 - Prob. 3DQ Ch. 13 - Prob. 4DQ Ch. 13 - Prob. 5DQ

(1) Introduction: Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio , quick ratio etc. To calculate: Current ratio.

Solution Summary: The author explains how common size income statements help to express each financial statement line item as a percentage of the base year.

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.

Want to see the full answer?

Chapter 13 Solutions

(1) Introduction: Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio , quick ratio etc. To calculate: Current ratio.

Solution Summary: The author explains how common size income statements help to express each financial statement line item as a percentage of the base year.

(1) Introduction: Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc. To calculate: Current ratio.

(2) Introduction: Common size income statements help to express each financial statement line item as a percentage of the base year. To express: Income-statement in form of common-size percent’s.

(3) Introduction: Trend analysis helps in calculating trend percent for data across the period that show patters. To calculate: Balance sheets trend percent’s.

Want to see the full answer?

Chapter 13 Solutions

(1)

Introduction:

Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.

To calculate:

Current ratio.

(2)

Introduction:

Common size income statements help to express each financial statement line item as a percentage of the base year.

To express:

Income-statement in form of common-size percent’s.

(3)

Introduction:

Trend analysis helps in calculating trend percent for data across the period that show patters.

To calculate:

Balance sheets trend percent’s.