Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 1, Problem 8PEA
(a)
To determine
Determine the ratio of liabilities to owners’ equity of Company M
(b)
To determine
Determine whether the creditor’s risk of Company M has increased or decreased from December 31, 2015 to December 31, 2016
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a. How much is the ForEx gain or (loss) on December 31, 2017?
b. How much is the outstanding accounts receivable as of December31, 2017?
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d. How much is the Net ForEx gain or loss?
Analyzing the ability to pay liabilities
Big Beautiful Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2018. To answer this question, you gather the following data:
Compute the following ratios for 2018 and 2017, and evaluate the company’s ability to Pay its current Liabilities and total liabilities:
a. Current ratio
b. Cash ratio
c. Acid-test ratio
d. Debt ratio
e. Debt to equity ratio
5. Compute the following financial ratios for 2015 and 2016 and interpreting the results in the image attached: (1 decimal place) d. age of receivables e. inventory turnover f. age of inventory g. asset turnover h. fixed asset turnover i. times interest earned j. debt ratio k. equity ratio l. debt to equity ratio m. gross profit margin n. return on equity o. return on assets
Chapter 1 Solutions
Financial Accounting
Ch. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Josh Reilly is the owner of Dispatch Delivery...Ch. 1 - On July 12, Reliable Repair Service extended an...Ch. 1 - Prob. 6DQCh. 1 - Describe the difference between an account...Ch. 1 - A business had revenues of 679,000 and operating...Ch. 1 - A business had revenues of 640,000 and operating...Ch. 1 - The financial statements are interrelated. (a)...
Ch. 1 - On February 22, Kountry Repair Service extended an...Ch. 1 - On March 31, Higgins Repair Service extended an...Ch. 1 - Brock Hahn is the owner and operator of Dream-It...Ch. 1 - Fritz Evans is the owner and operator of...Ch. 1 - Arrowhead Delivery Service is owned and operated...Ch. 1 - Interstate Delivery Service is owned and operated...Ch. 1 - Prob. 4PEACh. 1 - The revenues and expenses of Sentinel Travel...Ch. 1 - Using the income statement for Ousel Travel...Ch. 1 - Using the income statement for Sentinel Travel...Ch. 1 - Using the following data for Ousel Travel Service...Ch. 1 - Using the following data for Sentinel Travel...Ch. 1 - A summary of cash flows for Ousel Travel Service...Ch. 1 - A summary of cash flows for Sentinel Travel...Ch. 1 - Prob. 8PEACh. 1 - Prob. 8PEBCh. 1 - The following is a list of well-known companies:...Ch. 1 - Prob. 2ECh. 1 - Ozark Sports sells hunting and fishing equipment...Ch. 1 - Prob. 4ECh. 1 - Prob. 5ECh. 1 - Prob. 6ECh. 1 - Annie Rasmussen is the owner and operator of Go44,...Ch. 1 - Indicate whether each of the following is...Ch. 1 - Describe how the following business transactions...Ch. 1 - Prob. 10ECh. 1 - Indicate whether each of the following types of...Ch. 1 - The following selected transactions were completed...Ch. 1 - Teri West operates her own catering service....Ch. 1 - The income statement of a proprietorship for the...Ch. 1 - Four different proprietorships, Jupiter, Mars,...Ch. 1 - From the following list of selected items taken...Ch. 1 - Based on the data presented in Exercise 1-16,...Ch. 1 - Financial information related to Udder Products...Ch. 1 - Dairy Services was organized on August 1, 2016. A...Ch. 1 - One item is omitted in each of the following...Ch. 1 - Prob. 21ECh. 1 - Prob. 22ECh. 1 - Indicate whether each of the following activities...Ch. 1 - A summary of cash flows for Ethos Consulting Group...Ch. 1 - Prob. 25ECh. 1 - Prob. 26ECh. 1 - Lowes Companies Inc., a major competitor of The...Ch. 1 - On April 1 of the current year, Andrea Byrd...Ch. 1 - The amounts of the assets and liabilities of...Ch. 1 - Seth Feye established Reliance Financial Services...Ch. 1 - On July 1, 2016, Pat Glenn established Half Moon...Ch. 1 - DLite Dry Cleaners is owned and operated by Joel...Ch. 1 - The financial statements at the end of Wolverine...Ch. 1 - Amy Austin established an insurance agency on...Ch. 1 - The amounts of the assets and liabilities of...Ch. 1 - Jose Loder established Bronco Consulting on August...Ch. 1 - On April 1, 2016, Maria Adams established Custom...Ch. 1 - Bevs Dry Cleaners is owned and operated by Beverly...Ch. 1 - The financial statements at the end of Atlas...Ch. 1 - Prob. 1COPCh. 1 - Colleen Fernandez, president of Rhino Enterprises,...Ch. 1 - Prob. 2CPCh. 1 - Prob. 3CP
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- 5. Compute the following financial ratios for 2015 and 2016 and interpreting the results in the image attached: (1 decimal place) a. current ratio b. quick ratio c. receivable turnover d. age of receivables e. inventory turnover f. age of inventory g. asset turnover h. fixed asset turnover i. times interest earned j. debt ratio k. equity ratio l. debt to equity ratio m. gross profit margin n. return on equity o. return on assetsarrow_forwardWhich of the following ratios is used by the company to determine its ability to pay currently maturing obligations? a. Cash Ration b. Interest Coverage Ratio c. Equity Ratio d. Accounts Receivable turnoverarrow_forwardFollowing is a list of balance sheet accounts for Branman Co. as of December 31, 2018. Solve, a. Classify each of the following accounts as an asset, liability, or net worth. b. What is the balance in the Retained Earnings account if the data forms a valid balance sheet?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. a. Working Capital b. Current Ratio c. Acid Test Ratio 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_forwardThe debt to assets ratio measures the proportion of interest paid relative to dividends paid. the company's profitability. O whether interest can be paid on debt in the current year. O the percentage of the total assets provided by creditors.arrow_forwardWhat do the following data, taken from a comparative balance sheet, indicate about the companys ability to borrow additional long-term debt in the current year as compared to the preceding year?arrow_forward
- Using the following select financial statement information from Black Water Industries, compute the accounts receivable turnover ratios for 2018 and 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Black Water Industries?arrow_forwardThe current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.arrow_forwardI need assistance on the following regarding the attached balance sheet and income statement: Required: a) Calculate the following financial ratios for 2016 and 2017 13. Debt-to-equity ratio 14. Times-interest-earned ratio 15. Operating-cash-flow-to-capital-expenditures ratioarrow_forward
- Following are the financial statements of AB Ltd. for 2010. From the aforementioned table, calculate the following: 1. Current ratio 2. Liquid ratio 3. Receivables turnover ratio and collection period 4. Inventory turnover and holding period 5. Fixed assets turnover 6. Total assets turnover 7. Debt ratio 8. D/E ratio 9. Interest coverage ratio 10. PAT margin 11. ROA 12. ROE 13. EPS 14. D/P ratio 15. P/E ratio 16. Book value per sharearrow_forwardConsider the following company’s balance sheet and income statement. Number of days in inventory. Debt-to-asset ratio. Cash-flow-to-debt ratio.arrow_forwardSolve and perform the different financial ratios using the financial statements of XYZ Company for the year 2021. 1. Current Ratio 2. Quick Ratio 3. Receivables Turnover 4. Inventory Turnover 5. Debt Ratio 6. Equity Ratio 7. Times Interest Earned 8. Gross Profit Margin 9. Operating Profit Margin 10. Net Profit Marginarrow_forward
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