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Required: Compute for the indicated financial ratios for Palomer Trading financial statements. Choose the correct answer in each of the following.

Required: Compute for the indicated financial ratios for Palomer Trading financial statements. Choose the correct answer in each of the following.

FINANCIAL ACCOUNTING
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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ASSESSMENT -- Multiple Choice Problem The financial statements of PalomerTrading Ltd. are given below: 2018 P 10,470 2019 Cash and Cash Equivalents P 12,250 Receivables 9,065 8,055 Inventory 6,620 5,300 Prepaid Expenses 8,545 10,600 Total Current Assets 36,480 34,425 Other Assets 78,685 P 128,980 P 113,110 92,500 Total Assets Total current liabilities 36,150 42,335 Long-term liabilities 23,990 18,960 Psalm Palomer, Capital 68,840 51,815 Total Liabilities and Equity P 128,980 P 113,110 2019 Net Sales P 104,705 Cost of Goods Sold 32,275 Gross Profit 69,430 Selling Expenses 35,325 Administrative Expenses 12,815 Operating Income 21,290 Interest Expense 1,050 Net Income Р 20,240 Required: Compute for the indicated financial ratios for Palomer Trading financial statements. Choose the correct answer in each of the following. 1. Which statement best describes Palomer Trading's acid-test ratio? a. greater than 1 b. equal to 1 c. less than 1 d. none of the ave 2. Palomer Trading's inventory turnover during 2019 was (amounts rounded) a. 6 times b. 7 times C. 8 times d. not determinable from the data given 3. During 2019, Palomer Trading's day's sales in receivables ratio was (amounts rounded) a. 34 days b. 30 days c. 32 days d. 28 days 4. Which measure expresses Palomer Trading's times-interest-earned ratio? (amounts rounded) а. 54.7% b. 20 times c. 34 times d. 32 times 5. Palomer Trading's rate of return on equity can be described as а. 33.55% b. 16.72% c. 35.29% d. None of the above
Transcribed Image Text:ASSESSMENT -- Multiple Choice Problem The financial statements of PalomerTrading Ltd. are given below: 2018 P 10,470 2019 Cash and Cash Equivalents P 12,250 Receivables 9,065 8,055 Inventory 6,620 5,300 Prepaid Expenses 8,545 10,600 Total Current Assets 36,480 34,425 Other Assets 78,685 P 128,980 P 113,110 92,500 Total Assets Total current liabilities 36,150 42,335 Long-term liabilities 23,990 18,960 Psalm Palomer, Capital 68,840 51,815 Total Liabilities and Equity P 128,980 P 113,110 2019 Net Sales P 104,705 Cost of Goods Sold 32,275 Gross Profit 69,430 Selling Expenses 35,325 Administrative Expenses 12,815 Operating Income 21,290 Interest Expense 1,050 Net Income Р 20,240 Required: Compute for the indicated financial ratios for Palomer Trading financial statements. Choose the correct answer in each of the following. 1. Which statement best describes Palomer Trading's acid-test ratio? a. greater than 1 b. equal to 1 c. less than 1 d. none of the ave 2. Palomer Trading's inventory turnover during 2019 was (amounts rounded) a. 6 times b. 7 times C. 8 times d. not determinable from the data given 3. During 2019, Palomer Trading's day's sales in receivables ratio was (amounts rounded) a. 34 days b. 30 days c. 32 days d. 28 days 4. Which measure expresses Palomer Trading's times-interest-earned ratio? (amounts rounded) а. 54.7% b. 20 times c. 34 times d. 32 times 5. Palomer Trading's rate of return on equity can be described as а. 33.55% b. 16.72% c. 35.29% d. None of the above
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