The following accounts are taken from the financial statements of Rosen, Inc., a
ID: 2351339 • Letter: T
Question
The following accounts are taken from the financial statements of Rosen, Inc., as of the end of the year 2010. The accounts are in alphabetical order.Accounts Payable 28000 Net Income 48000
Accounts Receivable 66000 Other Current Liabilities 17000
Cash 54000 Total Assets 250000
Gross profit 160000 Total Liabilities 200000
Income Before Taxes 54000 Wages Payable 5000
Additional information: The average common shares outstanding during the year was 40,000.
Instructions
Compute the following:
(a) Current ratio
(b) Working capital
(c) Earnings per share
(d) Debt to total assets ratio
Explanation / Answer
a. current ratio = current assets/current liabilities. current assets = 54000 + 66000 = 120,000 current liabilities = 28000 + 5000 + 17000 = 50,000 current ratio = 120000/50000 = 2.4 b. working capital = current assets - current liabilities = 120000-50000 = 70,000 c. EPS = net income/avg common shares = 48,000/40,000 = $1.2 d. debt to total assets ratio = 200000/250000 = 0.8