Cash 1,500.00 Marketable Securities 2,500.00 Accounts Receivable 15,000.00 Inventory 33,000.00 Toatl Current Assets 52,000.00 Fixed Assets (net) 35,000.00 Total Assets 87,000.00 Liabilities & Stockholders Equity Accounts Payable Notes Payable 12,500.00 12,500.00 Total current liabilities 25,000.00 Long Term Debt 22,000.00 Total Liabilities 47,000.00 Commaon Stock 5,000.00 Contributed Capital Retained Eamings 18,000.00 17,000.00 Total Stockholders equity Total Liabilities & Stockholders equity 40,000.00 87,000.00 Sales 130,000.00 Cost of Sales 103,000.00 Gross Margin 27,000.00 Operating Expenses 16,000.00 11,000.00 Earning before interest and taxes Interest Expense 3,000.00 Earnings before taxes Income Tax 8,000.00 3,000.00 Eamings after taxes 5,000.00 Using the statements provided above... Calculate the following liquidity ratios: Current ratio Quick ratio Calculate the following asset management ratios: Average collection period Inventory turnover Fixed asset turnover Total asset turnover Calculate the following financial leverage ratios Debt to equity ratio Long-term debt to equity Calculate the following profitability ratios: Gross profit margin Net profit margin Return on investment Return on stockholders’ equity

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Using the statements provided

Calculate the following liquidity ratios:

Current ratio

Quick ratio

 

Calculate the following asset management ratios:

Average collection period

Inventory turnover

Fixed asset turnover

Total asset turnover

 

Calculate the following financial leverage ratios

Debt to equity ratio

Long-term debt to equity

 

Calculate the following profitability ratios:

Gross profit margin

Net profit margin

Return on assets

Return on stockholders’ equity

 

For example: you should present it like the text, or as:Gross margin  = 1,933 divided by 8,689 = 22.2%

 

 

A competitor of ACME has for the same time period reported the following three ratios:

 

Current ratio                                1.52
Long-term debt to equity             .25 or 25%
Net profit margin                         .08 or 8%

 

Given these three ratios only which company is performing better on each ratio? Also overall who would you say has the best financial performance and position. Support your answer.

Cash
1,500.00
Marketable Securities
2,500.00
Accounts Receivable
15,000.00
Inventory
33,000.00
Toatl Current Assets
52,000.00
Fixed Assets (net)
35,000.00
Total Assets
87,000.00
Liabilities & Stockholders Equity
Accounts Payable
Notes Payable
12,500.00
12,500.00
Total current liabilities
25,000.00
Long Term Debt
22,000.00
Total Liabilities
47,000.00
Commaon Stock
5,000.00
Contributed Capital
Retained Eamings
18,000.00
17,000.00
Total Stockholders equity
Total Liabilities & Stockholders equity
40,000.00
87,000.00
Sales
130,000.00
Cost of Sales
103,000.00
Gross Marg
27,000.00
Operating Expenses
16,000.00
11,000.00
Earning before interest and taxes
Interest Expense
3,000.00
Earnings before taxes
Income Tax
8,000.00
3,000.00
Earmings after taxes
5,000.00
Using the statements provided above...
Calculate the following liquidity ratios:
Current ratio
Quick ratio
Calculate the following asset management ratios:
Average collection period
Inventory turnover
Fixed asset turnover
Total asset turnover
Calculate the following financial leverage ratios
Debt to equity ratio
Long-term debt to equity
Calculate the following profitability ratios:
Gross profit margin
Net profit margin
Return on investment
Return on stockholders' equity
Transcribed Image Text:Cash 1,500.00 Marketable Securities 2,500.00 Accounts Receivable 15,000.00 Inventory 33,000.00 Toatl Current Assets 52,000.00 Fixed Assets (net) 35,000.00 Total Assets 87,000.00 Liabilities & Stockholders Equity Accounts Payable Notes Payable 12,500.00 12,500.00 Total current liabilities 25,000.00 Long Term Debt 22,000.00 Total Liabilities 47,000.00 Commaon Stock 5,000.00 Contributed Capital Retained Eamings 18,000.00 17,000.00 Total Stockholders equity Total Liabilities & Stockholders equity 40,000.00 87,000.00 Sales 130,000.00 Cost of Sales 103,000.00 Gross Marg 27,000.00 Operating Expenses 16,000.00 11,000.00 Earning before interest and taxes Interest Expense 3,000.00 Earnings before taxes Income Tax 8,000.00 3,000.00 Earmings after taxes 5,000.00 Using the statements provided above... Calculate the following liquidity ratios: Current ratio Quick ratio Calculate the following asset management ratios: Average collection period Inventory turnover Fixed asset turnover Total asset turnover Calculate the following financial leverage ratios Debt to equity ratio Long-term debt to equity Calculate the following profitability ratios: Gross profit margin Net profit margin Return on investment Return on stockholders' equity
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