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(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
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.
(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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Chapter 13 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- A Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and the following data. Required: 1. Prepare all the financial ratios for Burch for 2019 and 2018 (using percentage terms where appropriate and rounding all answers to two decimal places). 2. CONCEPTUAL CONNECTION Explain whether Burchs short-term liquidity is adequate. 3. CONCEPTUAL CONNECTION Discuss whether Burch uses its assets efficiently. 4. CONCEPTUAL CONNECTION Determine whether Burch is profitable. 5. CONCEPTUAL CONNECTION Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. 6. Perform a Dupont analysis (rounding to two decimal places) for 2018 and 2019.arrow_forwardCompute the following ratios for the most recent two years, show all values in the computations: 1.Current ratio 2.Accounts receivable turnover 3.Debt ratio(TotalLiabilities/Total Assets, as a percentage) 4.Debt-to-equity ratio Based on the results above, what conclusions can you make about the liquidity and solvency of the company?arrow_forwardInstructions 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 assetsarrow_forward
- VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Secuities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 220,000 200,000 160,000 P445,000 P380,000 245,000 Operating Expenses: Fixed Assets Selling Expenses 22,000 25,000 Total…arrow_forwardVII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Securities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 245,000 220,000 Operating Expenses: Fixed Assets 200,000 160,000 Selling Expenses 22,000 25,000 Total Assets P445,000…arrow_forward2) Ratios Based on the information given in picture #1, complete the following ratios for the last TWO years and indicate whether the trend is favorable or unfavorable. Note percentages and times should be to one decimal place (e.g. 14.8%; 5.8x) Liq./Solv. Ratios Current Yr. Prior Yr. Fav/Unfav. Current Ratio (X) {Total. Current Assets/ Total Current Liabilities} Quick Ratio (X) {Cash + Short term Investments + Current Receivables/ Current Liabilities} Day's Sales Uncollected (days) {Total Accounts Receivables / Sales x 365}arrow_forward
- Please Complete the Following: 1. Complete a vertical and horizontal analysis on the tabs labeled "Balance Sheet" and "Income Statement", use total assets on the balance sheet and net sales on the income statement for your vertical analysis. 2. Using the balance sheet and income statement, complete the ratios on the tab labeled "Ratios" 3. Answer the final OBSERVATION QUESTION (listed under Ratios calculations) Consolidated Balance Sheets (USD $) 12/31/2020 Vertical Analysis 12/31/2019 Vertical Analysis Horizontal Analysis In Millions, unless otherwise specified Current Assets: Cash and Cash Equivalents $1,723 $1,929 Receivables, net 1,484 1,398 Merchandise Inventories 11,079 11,057 Other Current Assets 1,016 895 Total Current Assets 15,302 15,279 Property and Equipment, at…arrow_forwardSome recent financial statements for Smolira Golf Corporation follow. Find the following financial ratios for Smolira Golf Corporation (use year-end figures rather than average values where appropriate): (Enter the profitability ratio answers as a percent rounded to 2 decimal places, e.g., 32.16. Round the remaining answers to 2 decimal places, e.g., 32.16.) a. Profitability Ratios Profit margin % Return on Assets % Return on Equity % b. Asset utilization ratios: Total asset turnover times Inventory turnover times Receivables turnover timesarrow_forwardCommon-size financial statements recast each statement item as: Multiple Choice a percentage using industry averages for the "base number." a percentage using a base year number for each line item. a percentage of some "base number" on the financial statement in question. a percentage of the "bottom line."arrow_forward
- Not Graded Using the fiscal year end 2020 annual report for General Mills, Inc. and the figures from the 2020 annual report as noted below, calculate the financial ratios for 2020 and 2019 indicated using the EXCEL template provided:1. Gross profit percentage2. Return on sales3. Asset turnover 4. Return on assets5. Return on common stockholders’ equity6. Current ratio7. Quick ratio8. Operating-cash-flow-to-current-liabilities ratio9. Accounts receivable turnoverTotal assets 2020 = $30,806.7Total stockholders’ equity 2020 = $8,349.5Total current liabilities 2020 = $7,491.5Accounts receivable 2020 = $1,615.1Inventory 2020 = $1,426.3Year-end closing stock price May 2020 = $58.80Year-end closing stock price May 2019 = $53.56arrow_forwardDefinitional problems: Listed are 11 terms that relate to ratio analysis:1. Book value per share2.Inventoryturnover3. Debt-to-equity ratio4. Average collection period5. Average sales period6. Return on common equity7. Earnings per share8. Price/earnings ratio9. Return on total assets10. Current ratio11. Accounts-receivable turnoverChoose the financial ratio or term from the list that most appropriately completes each of the following statements:1. The__________ tends to have an effect on the market price per share asreflected in the price/earnings ratio.2. The__________ indicates whether a stock is relatively cheap or relativelyexpensive in relation to current earnings. 3. The________ measures the amount that would be distributed to holders of common stock if all assets were sold at their balance-sheet carrying amount and if all creditors were paid off.4. The_____________ is a rough measure of how many times a company'saccounts…arrow_forwardCalculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio. Return on capital employed Gross profit percentage Net profit percentage Quick/Acid test ratio Receivables collection period Earnings per share Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios. © List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing sharesarrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
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