Perform the calculation for each ratio, and provide an explanation of the result. a. Return on equity b. Total assets turnover c. Return on assets d. Current ratio e. Receivables turnover
Perform the calculation for each ratio, and provide an explanation of the result. a. Return on equity b. Total assets turnover c. Return on assets d. Current ratio e. Receivables turnover
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Perform the calculation for each ratio, and provide an explanation of the result.
a.
b. Total assets turnover
c.
d. Current ratio
e. Receivables turnover
Transcribed Image Text:Big Rock Paving Company
Assets
Liabilities
Current Assets:
Current Liabilities:
Cash
500,000 Accounts Payable
300,000 Notes Payable
700,000
500,000
Accounts Receivable
Inventory
800,000
Total Current Assets
1,300,000 Total Current Liabilities
1,200,000
Owners' Equity:
2,200,000 Common Stock ($1 Par)
600,000 Capital Surplus
1,600,000 Retained Earnings
2,900,000 Total Owners' Equity
Fixed Assets:
Property, Plant & Equipment
Less: Accumulated Depreciation
600,000
100,000
100,000
Net Fixed Assets
Total Assets
800,000
Total Liabilities and Owners'
2,900,000
Equity
Big Rock Paving Company
Income Statement for Year Ending December 31, 2021
Sales
3,400,000
Less: Cost of Goods Sold
2,700,000
Less: Administrative Expenses
Less Depreciation
Earnings Before Interest and Taxes
Less: Interest Expense
700,000
682.000
(682,000)
120.000
(802,000)
(280,000)
(522,000)
Taxable Income
Less: Taxes
Net Income
Dividends
Addition to Retained Earnings
(522,000)
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