Use the following information from the current year financial statements of a co
ID: 2778293 • Letter: U
Question
Use the following information from the current year financial statements of a company to calculate the following:
(a) Current ratio.
(b) Acid test ratio.
(c) Working Capital.
(d) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.)
(e) Days' sales uncollected.
(f) Inventory turnover. (Assume the prior year's inventory was $50,200.)
(g) Times interest earned ratio.
(h) Debt ratio.
(i) Profitability ratio.
(j) Return on total assets. (Assume the prior year's assets were $850,200.)
Income statement data: Sales (all on credit) .................................... $1,075,000
Cost of goods sold ...................................... 575,000
Gross profit on sales................................... $ 500,000
Operating expenses..................................... 305,000
Operating income ....................................... $ 195,000
Interest expense .......................................... 20,400
Income before taxes.................................... $ 174,600
Income taxes............................................... 74,000
Net income.................................................. $ 100,600
Balance sheet data:
Cash $ 38,400
Accounts receivable 120,000
Inventory 56,700
Prepaid Expenses 24,000
Total current assets $239,100
Total plant assets 708,900
Total assets $948,000
Accounts payable $ 91,200
Interest payable 4,800
Long-term liabilities 204,000
Total liabilities $300,000
Common stock, $10 par 480,000
Retained earnings 168,000
Total liabilities and equity $948,000
Explanation / Answer
a. current ratio =current asset / current liability
=239100/96000=2.49
b. Accounts receivable turnover=1075000/110000=9.77
c. days sales collected=1.869
d. Inventory turnover=575000/106900=5.878
e. times interest earned ratio=4.25
f. return=100600/608000=.165 or 16.5%
g. EPS= 100600/48000=2.1
h. P/E ratio=26/2.1=12.38
i. Dividend yield=1.25/26=0.048