A summary of data from the income statements and balance sheets for Okumura Construction Supply, Inc., for 20x7 and 20x6 appears at the top of the next page.

Total assets and stockholders’ equity at the beginning of 20x6 were $1,360,000 and $840,000, respectively.
Required 1. Compute the following liquidity measures for 20x6 and 20x7:

(a) working capital and

(b) current ratio. User Insight: Comment on the differences between the years.
2. Compute the following measures of profitability for 20x6 and 20x7:

(a) profit margin,

(b) asset turnover,

(c) return on assets,

(d) debt to equity ratio, and

(e) return on equity. User Insight: Comment on the change in performance from 20x6 to 20x7.
Classified Financial Statement Preparation and Analysis

Transcribed Image Text:

20x7 Current assets $ 366,000 Total assets 2,320,000 Current liabilities 180,000 20x6 $ 310,000 1,740,000 120,000 Long-term liabilities 800,000 580,000 Stockholders' equity 1,340,000 1,040,000 Net sales 4,600,000 3,480,000 Net income 300,000 204,000