Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Question
Chapter 14, Problem 2E
To determine
The short-term assets which are used for day-to-day operation of a business are called working capital of the business. It is computed by deducting the current liabilities from the current assets of a business.
A current ratio measures a company’s ability to pay back its short term liabilities by the current assets of the company. It is ascertained by dividing the current assets by the current liabilities of the company.
Acid-Test Ratio:
It measures the company’s ability to pay back its current liabilities by the quick assets of the company. Quick assets are those current assets which can be converted into cash in a very short period of time.
Computation of following financial data and ratios for this year:
1. Working capital
2. Current ratio
3. Acid-test ratio
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Financial Ratios for Assessing Liquidity
Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of this year was $18. All of the company’s sales are on account.
Required:
Compute the following financial data and ratios for this year:
1. Working capital.
2. Current ratio.
3. Acid-test ratio.
Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below.
The company did not issue any new common stock during the year. A total of 960,000 shares of common stock were outstanding. The
Interest rate on the bond payable was 12%, the Income tax rate was 40%, and the dividend per share of common stock was $0.75 last
year and $0.40 this year. The market value of the company's common stock at the end of this year was $26. All of the company's sales
are on account.
Assets
Current assets:
Cash
Accounts receivable, net
Inventory
Prepaid expenses
Total current assets
Property and equipment:
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Buildings and equipment, net
Total property and equipment
Total assets
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued liabilities
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Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 870,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $21.50. All of the company's sales are on account.
Required:Compute the following financial data for this year:
1. Earnings per share. (Round your answer to 2 decimal places.)2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)4. Dividend yeild ratio. (Round your intermediate calculatioms and final answer to 2 decimal places.)5. Book value per share. (Round…
Chapter 14 Solutions
Introduction To Managerial Accounting
Ch. 14 - Prob. 1QCh. 14 - What is the basic purpose for examining trends in...Ch. 14 - Prob. 3QCh. 14 - Prob. 4QCh. 14 - What is meant by the dividend yield on a common...Ch. 14 - What is meant by the term financial leverage?Ch. 14 - Prob. 7QCh. 14 - Prob. 8QCh. 14 - Prob. 9QCh. 14 - Markus Company’s common stock sold for $2.75 per...
Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Markus Company’s common stock sold for $2.75 per...Ch. 14 - Prob. 11F15Ch. 14 - Prob. 12F15Ch. 14 - Prob. 13F15Ch. 14 - Prob. 14F15Ch. 14 - Prob. 15F15Ch. 14 - Common-Size Income Statement A comparative income...Ch. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Financial Ratios for Debt Management Refer to the...Ch. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Prob. 7ECh. 14 - Prob. 8ECh. 14 - Financial Ratios for Assessing Profitability and...Ch. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Selected Financial Measures for Assessing...Ch. 14 - Effects of Transactions on Various Financial...Ch. 14 - Effects of Transactions on Various Ratios Denna...Ch. 14 - Prob. 15PCh. 14 - Common-Size Financial StatementsRefer to the...Ch. 14 - Interpretation of Financial Ratios Pecunious...Ch. 14 - Common-Size Statements and Financial Ratios for a...Ch. 14 - Financial Ratios for Assessing Profitability and...
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