Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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QUESTION 1- Analysis of Financial Statement and Cash Flow
The balance sheet and income statement for the Changlun Company are as folow:
Balance Sheet (RM'000)
RM
Cash
500
Account receivable
2,000
1,000
Inventories
Current assets
Net fixed assets
3,500
4,500
Total assets
Account payable
Accrued expenses
Shorts-term notes payable
Current liabilities
8,000
1,100
600
300
Long-term debt
Owners' equity
Total liabilities and owner's equity
2,000
2,000
4,000
8,000
Income Statement (RM'000)
RM
Net sales (all credit)
Cost of good sold
Gross profit
Operating espenses
Operating income
Interest expenses
Earning before taxes
Income taxes (40%)
8,000
(3,300)
4,700
(3,000)
1,700
(367)
(1,333)
(533)
800
Net income
' Indludes depraciation expene of RM500 for the year
Calculate the following ratios:
Current ratio
Debt Ratio
Time interest earned
Inventory turnover
Total asset turnover
Average collection period
Fixed assets turnover
Gross profit margin
Retun on equity
Operating profit margin
Operating income retun on investment
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Transcribed Image Text:QUESTION 1- Analysis of Financial Statement and Cash Flow The balance sheet and income statement for the Changlun Company are as folow: Balance Sheet (RM'000) RM Cash 500 Account receivable 2,000 1,000 Inventories Current assets Net fixed assets 3,500 4,500 Total assets Account payable Accrued expenses Shorts-term notes payable Current liabilities 8,000 1,100 600 300 Long-term debt Owners' equity Total liabilities and owner's equity 2,000 2,000 4,000 8,000 Income Statement (RM'000) RM Net sales (all credit) Cost of good sold Gross profit Operating espenses Operating income Interest expenses Earning before taxes Income taxes (40%) 8,000 (3,300) 4,700 (3,000) 1,700 (367) (1,333) (533) 800 Net income ' Indludes depraciation expene of RM500 for the year Calculate the following ratios: Current ratio Debt Ratio Time interest earned Inventory turnover Total asset turnover Average collection period Fixed assets turnover Gross profit margin Retun on equity Operating profit margin Operating income retun on investment
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