1. From the data given in the following table, please construct as many of the financial ratios discussed in this chapter as you can and then indicate what dimension of a business firm's performance each ratio represents. Business Assets Cash account Accounts receivable Inventories Fixed assets Miscellaneous assets Liabilities and Equity Short-term debt: Accounts payable Notes payable Long-term debt (bonds) Equity capital Annual Revenue and Expense Items $600 $60 Net sales 155 128 286 Cost of goods sold Wages and salaries Interest expense 96 Overhead expenses 725 Depreciation expenses Selling, administrative, and other expenses Before-tax net income 108 117* Taxes owed 325* 15 160 725 *Annual principal payments on bonds and notes payable total $55. The firm's marginal tax rate is 35 percent. 445 52 28 29 After-tax net income 12 28 6 1 5

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Evaluating Financials and Ratios
From Chapter 17
1. From the data given in the following table, please construct as many of the financial ratios
discussed in this chapter as you can and then indicate what dimension of a business firm's
performance each ratio represents.
Cash account
Accounts receivable
Inventories
Fixed assets
Miscellaneous assets
Cost of goods sold
Wages and salaries
Interest expense
Overhead expenses
Depreciation expenses
Selling, administrative,
and other expenses
108 Before-tax net income
117* Taxes owed
325*
After-tax net income
15
160
725
*Annual principal payments on bonds and notes payable total $55. The firm's marginal tax rate is 35 percent.
Short-term debt:
Accounts payable
Notes payable
Long-term debt (bonds)
Equity capital
A.
Business Assets
B.
C.
D.
The financial ratios that could be computed given the data in this problem fall under the
following categories:
E.
F.
Liabilities and Equity
G.
Annual Revenue and Expense Items
$60 Net sales
155
128
286
96
725
Expense Control Ratios
Operating Efficiency: Measure of a Business Firm's Performance Effectiveness
Marketability of the Customer's Product or Service
$600
Coverage Ratios: Measuring the Adequacy of Earnings
Liquidity indicators for business customers
Profitability indicators for business customers
The Financial leverage factor:
445
52
28
29
12
28
6
1
5
Transcribed Image Text:Evaluating Financials and Ratios From Chapter 17 1. From the data given in the following table, please construct as many of the financial ratios discussed in this chapter as you can and then indicate what dimension of a business firm's performance each ratio represents. Cash account Accounts receivable Inventories Fixed assets Miscellaneous assets Cost of goods sold Wages and salaries Interest expense Overhead expenses Depreciation expenses Selling, administrative, and other expenses 108 Before-tax net income 117* Taxes owed 325* After-tax net income 15 160 725 *Annual principal payments on bonds and notes payable total $55. The firm's marginal tax rate is 35 percent. Short-term debt: Accounts payable Notes payable Long-term debt (bonds) Equity capital A. Business Assets B. C. D. The financial ratios that could be computed given the data in this problem fall under the following categories: E. F. Liabilities and Equity G. Annual Revenue and Expense Items $60 Net sales 155 128 286 96 725 Expense Control Ratios Operating Efficiency: Measure of a Business Firm's Performance Effectiveness Marketability of the Customer's Product or Service $600 Coverage Ratios: Measuring the Adequacy of Earnings Liquidity indicators for business customers Profitability indicators for business customers The Financial leverage factor: 445 52 28 29 12 28 6 1 5
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