(1)
Introduction:
Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes
To calculate:
Current ratio.
Answer to Problem 4PSB
Current ratio is 2.50:1
Explanation of Solution
= $43,600
= $17,400
= 2.50:1
(2)
Introduction:
Liquidity or short-term ratios determines the ability of a firm to pay its current obligations. A good liquidity ration states that the company has liquid assets which can be easily convertible into cash. It includes current ratio, quick ratio etc.
To calculate:
Acid-test ratio.
Answer to Problem 4PSB
Acid-test ratio is 1.72:1
Explanation of Solution
= 1.72:1
(3)
Introduction:
Days sales uncollected ratio helps the creditors and investors to measure the time in which company collects its account receivable.
To calculate:
Days sales uncollected.
Answer to Problem 4PSB
Days sales uncollected = 18 days
Explanation of Solution
= 18 days
(4)
Introduction:
Inventory turnover ratio measures how many times inventory is sold during a period.
To calculate:
Inventory turnover ratio.
Answer to Problem 4PSB
Inventory-turnover ratio is 15.2 times.
Explanation of Solution
= $15,450
= 15.2 times
(5)
Introduction:
Days sales in inventory calculates the time period which company takes to convert its inventory into sales.
To calculate:
Days sales in inventory.
Answer to Problem 4PSB
Days sales in inventory = 24 days
Explanation of Solution
= 24 days.
(6)
Introduction:
Debt-equity ratio measures the proportion of debt and equity in the capital structure.
To calculate:
Debt to equity ratio.
Answer to Problem 4PSB
Debt to equity ratio is 1.4:1
Explanation of Solution
= $47,400:
= $70,100
= 1.4:1
(7)
Introduction:
Time interest earned ratio measures the amount of income that will be required for covering the interest expenses in the future.
To calculate:
Time interest earned.
Answer to Problem 4PSB
Time interest earned= 6.6
Explanation of Solution
= 6.6
(8)
Introduction:
Profit margin ratio is calculated by dividing net income by the net sales.
To calculate:
Profit margin ratio.
Answer to Problem 4PSB
Profit margin ratio is 7.5%
Explanation of Solution
= 7.5%
(9)
Introduction:
Asset turnover ratio calculates the ability of a company to generate sales with the total assets.
To calculate:
Asset-turnover ratio.
Answer to Problem 4PSB
Asset-turnover ratio = 2.6
Explanation of Solution
= 2.6:
(10)
Introduction:
Return on total asset is a ratio that calculated by dividing earnings before income tax by total assets.
To calculate:
Return on total asset.
Answer to Problem 4PSB
Return on total asset is $0.20
Explanation of Solution
= $0.20
= $23,800
(11)
Introduction:
Return on common
To calculate:
Return on common stockholder’s equity.
Answer to Problem 4PSB
Return on common stockholder’s equity is $0.33
Explanation of Solution
= $0.33:
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Chapter 13 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- Selected ratios of Company X are shown below: Inventory turnover Days' sales uncollected Days' purchases in accounts payable Total asset turnover Equity ratio Times interest earned 2021 5.3 32.4 21.0 2.6 0.8 N.A. 2020 7.1 18.3 20.0 2.5 0.8 N.A. Using the financial ratios provided, analyse the performance of Company X in 2021 compared to the previous year.arrow_forwardFINANCIAL RATIO: Requirement: Compute for the following financial ratios for the year 2021 (round-off answers to two decimal places) a. Current ratio b. Quick (Acid-test) ratio c. Working capital d. Inventory turnover e. Days of inventory (use 365 days) f. Accounts receivable turnover (assume all sales are on credit) g. Days of receivable (use 365 days) h. Debt ratio i. Equity ratio j. Debt-to-equity ratio k. Gross profit ratio 1. Net profit ratio m. Return on assets n. Return on equityarrow_forwardRequired: Analyse Delima’s financial statement. Include the following ratios for 2020 and discuss your findings (2019 values are provided for comparison): Current ratio (year 2019 – 92:1) Inventory turnover (year 2019 – 7.2 times) Debt to assets ratio (year 2019 – 82%) Return on assets (year 2019 – 10.8%) Profit margin (year 2019 – 10.0%)arrow_forward
- You are requested to reconstruct the account of Kalang Kalang Supplies foranalysis.The following data were made available to you:· Gross margin for 2012 amounted to P472,500· Ending balance of merchandise inventory was P200,000· Long-term debt liabilities consisted of bonds payable with interest rate of20%· Total shareholders’ equity as of December 31, 2012 was P750,000· Gross margin ratio, 35%· Debt-to-equity ratio 0.8 to 1· Times interest earned 10· Quick ratio 1.3 to 1· Operating expenses to sales 18%arrow_forwardA) Calculate the following liquidity ratios for 2020. 1. Working capital- 2.Current Ratio- 3. Acid test ratio- 4. Accounts receivable turnover- B) calculate the following liquidity ratios for 2020. 1. Average collection period (in days)- 2. Inventory turnover (in times)- C) calculate the average days to sell inventory for 2020. 1. Average days to sell inventory-arrow_forwardRequired: Use an Excel file to answer the following questions. Compute the following ratios for the companies’ 2014 fiscal years. (Use formulas): Current ratio Average days to sell inventory. (Use average inventory.) Debt to assets ratio. Return on investment. (Use average assets and use “earnings from continuing operations” rather than “net earnings.”) Gross margin percentage. Asset turnover. (Use average assets.) Net margin. (Use “earnings from continuing operations” rather than “net earnings.”) Plant assets to long-term debt ratio. Which company appears to be more profitable? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. Which company appears to have the higher level of financial risk? Explain your answer and identify which ratio(s) from Requirement a you used to reach your conclusion. Which company appears to be charging higher prices for its goods? Explain your answer and identify which ratio(s) from Requirement a you…arrow_forward
- Examine the selected data over the 5-year period as shown in the table below for Dumbledore Ltd. Item Sales Cost of sales EBIT Interest NPAT Current assets Total assets current liabilities Total liabilities Equity Gross margin Interest coverage Current ratio 2021 $m 286.41 180.03 51.18 37.07 35.13 43.85 226.18 55.99 98.99 127.19 0.37 1.38 0.78 Year 2020 $m 280.80 166.69 51.08 33.70 35.10 43.20 221.75 53.58 91.66 130.09 0.41 1.52 0.81 2019 $m 275.29 154.35 50.98 30.64 35.06 42.56 217.40 51.27 84.87 132.53 0.44 1.66 0.89 2018 $m 269.89 142.91 50.88 27.85 35.03 41.93 213.13 49.06 78.58 134.56 0.47 1.83 U.OJ 2017 $m 264.60 134.19 49.88 25.32 34.51 41.31 206.93 47.40 74.48 132.44 0.49 1.97 0.87 2016 $m 252.00 126.00 48.90 24.00 34.00 40.70 200.90 45.80 70.60 130.30 0.50 2.04 0.89arrow_forwardBased upon the information given below, calculate the following: Current ratio Acid test Accounts receivable turnover ratio Cash ratio Inventory turnover EPS Total asset turnover Debt ratio Debt-to-equity ratio Times interest earned ROI Net profit margin ROE Market price/Book value P/E Average Collection Period BALANCE SHEET ASSETS LIABILITIES & STOCKHOLDERS EQUITY Cash $ 1,500 Accounts payable $12,500 Marketable securities 2,500 Notes payable 12,500 Accounts receivable 15,000 Total…arrow_forwardCalculate the following financial ratios for Phone Corporation: (Use 365 daysin a year. Do not round intermediate calculations. Round your finalanswers to 2 decimal places.)1. Return on Assets (use average balance sheet figures)2. Return on capital (use average balance sheet figures) %3. Days in inventory (use start of year balance sheet figures) %4. Inventory turnover (use start of year balance sheet figures5. Average collection period (use start of year balance sheet figures)6. Operating profit margin %7. Long term debt ratio (use end of year balance sheet figures)8. Total Debt ratio (use end of year balance sheet figures)arrow_forward
- Selected information from the comparative financial statements of AppleVerse Company for the year ended December 31 appears below: 2018 2017 Php Php Accounts receivable (net) 175,000 200,000 Inventory 130,000 150,000 Total assets 1,100,000 800,000 Current liabilities 140,000 110,000 Long-term debt 410,000 300,000 Net credit sales 800,000 700,000 Cost of goods sold 600,000 530.000 Interest expense 40.000 25,000 Income tax expense 60.000 29,000 Net income 150.000 85,000 Net cash provided by operating 220,000 135,000 activities Compute for the Receivables Turnover for 2018. O 2.13 O 4.27 O 5.95 O 3.23arrow_forwardSelected information from the comparative financial statements of Barcelona Company for the year ended December 31 appears below: 2017 2016 Accounts receivable (net) $200,000 175,000 Inventory 170,000 130,000 Total assets 1,100,000 800,000 Current liabilities 140,000 110,000 Long-term debt 300,000 410,000 Net credit sales 900,000 700,000 Cost of goods sold 530,000 600,000 Interest expense 40,000 25,000 Income tax expense 60,000 29,000 Net income 120,000 85,000 Net cash provided by operating activities 250,000 135,000 Instructions Answer the following questions relating to the year ended December 31, 2017. Show computations. 1. The inventory turnover for 2017 is 2. The number of times interest earned in 2017 is 3. The accounts receivable turnover for 2017 is 4. The return on assets for 2017 isarrow_forwardThe following is a partial listing of accounts for XYZ, Inc., for the year ended December 31, 2020. Required: Prepare multiple step income statement for the year of 2020. Finished Goods Current Maturities of Long-Term Debt Accumulated Depreciation Accounts Receivable $ 38,872 2,515 19,960 Sales Revenue 6,273 127,260 Treasury Stock 251 Prepaid Expenses 2,199 Deferred Taxes (long-term liability) 8,506 Interest Expense 2,410 Allowance for Doubtful Accounts 915 Retained Earnings 18,951 Raw Materials 9,576 Accounts Payable 19,021 Cash and Cash Equivalents 8,527 Sales Salaries Expense 872 Cost of Goods Sold 82,471 Investment in Unconsolidated 3,559 Subsidiaries Income Taxes Payable 8,356 Work In Process 1,984 Additional Paid-In Capital 9,614 Equipment 41,905 Long-Term Debt 15,258 Rent Income 2,468 Common Stock 3,895 Notes Payable (short-term) 6,156 Income Tax Expense 2,461arrow_forward
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