FOCUS ON PERSONAL FINANCE LL/ACCESS >BI
6th Edition
ISBN: 9781260529326
Author: Kapoor
Publisher: McGraw-Hill Publishing Co.
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Chapter 2, Problem 5P
a)
Summary Introduction
To determine: The debt ratio.
b)
Summary Introduction
To determine: The current ratio.
c)
Summary Introduction
To determine: The debt payment ratio.
d)
Summary Introduction
To determine: The savings ratio.
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Using the following facts to calculate the Current Ratio, and the Debt Ratio: Ending Total Assets = $705,000; Ending Total Liabilities = $360,000; Ending Current Assets = $295,000; and Long Term Liabilities = $210,000
Calculate the following for Co. XYZ:
a. Current ratio
b. Debt ratio
Assets:
Cash and marketable securities $400,000
Accounts receivable 1,415,000
Inventories 1,847,500
Prepaid expenses 24,000
Total current assets $3,686,500
Fixed assets 2,800,000
Less: accumulated depreciation 1,087,500
Net fixed assets $1,712,500
Total assets $5,399,000
Liabilities:
Accounts payable $600,000
Notes payable 875,000
Accrued taxes
Total current liabilities $1,567,000
Long-term debt 900,000
Owner's equity
Total liabilities and owner's equity
Co. XYZ Income Statement:
Net sales (all credit) $6,375,000
Less: Cost of goods sold 4,375,000
Selling and administrative expense 1,000,500
Depreciation expense 135,000
Interest expense
Earnings before taxes $765,000
Income taxes
Net income
Common stock dividends $230,000
Change in retained earnings
Using Ratios to Determine Account Balance.We are givem the following information for Cathy Corporation
Sales(credit) . 3,000,000
Cash 150,000
Inventory 850,000
Current liabilities 700,000
Asset turnover 1.25 times
Current ratio 2.50 times
Debt-to assets ratio 40%
Receivable turnover 6 times
Current assets are composed of cash, marketable securities, accounts receivable and inventory.
a.Calculate the amount receivable
b.Calculate the marketable securities
c.Calculate the fixed assets
d.Calculate the long term debt
Chapter 2 Solutions
FOCUS ON PERSONAL FINANCE LL/ACCESS >BI
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- Mike's Place has total assets of S 1 52,080, a debt-equity ratio of .62, and net income of S14,342 What is the return on equity?arrow_forwardCalculate the current ratio in each of the following separate cases. Current Assets Current Liabilities Case 1 $ 75,000 $ 30,000 Case 2 $161,500 $ 85,000 Case 3 $ 45,000 $ 53,000 Case 4 $132,000 $127,000 Case 5 $ 99,000 $110,000arrow_forwardThe following figures are taken from the statement of financial position of GEN Co. $m Inventory 2 Receivables 3 Cash 1 Payables 3 Bank loan repayable in 5 years time 3 What is the current ratio? A 1.33 B 2.00 C 1.00 D 0.33arrow_forward
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