1.ABC had the following comparative current assets and current liabilities:

Dec. 31, 2016

Dec. 31, 2015

Current assets

Cash

$30,000

$20,000

Short-term investments

30,000

20,000

Accounts receivable

65,000

95,000

Inventory

100,000

80,000

Prepaid expenses

45,000

25,000

Total current assets

$270,000

$240,000

Current liabilities

Accounts payable

$140,000

$110,000

Salaries payable

40,000

30,000

Income tax payable

20,000

15,000

Total current liabilities

$200,000

$155,000

During 2016, credit sales and cost of goods sold were $800,000 and $500,000, respectively.

Required: Compute the following liquidity measures for 2016:

A.

Current ratio.

B.

Acid-test ratio.

C.

Receivables turnover.

D.

Inventory turnover.

2.The income statement for XYZ for the year ended December 31, 2016, appears below.

Sales

$900,000

Cost of goods sold

600,000

Gross margin

300,000

Expenses

160,000*

Net income

$ 140,000

*Includes $40,000 of interest expense and $30,000 of income tax expense.

Additional information:

1.

Common stock outstanding during 206 totaled 60,000 shares.

2.

The market price of Ray's stock was $20 at the end of 2016.

3.

Cash dividends of $20,000 were paid, $5,000 of which were paid to preferred stockholders.

Required: Compute the following ratios for 2016:

A.

earnings per share.

B.

price-earnings.

C.

times-interest-earned ratio.

Chapter 16 Homework Problems 1. ABC had the following comparative current assets and current liabilities: Dec. 31, 2016 Dec. 31, 2015 Current assets Cash Short-term investments Accounts receivable Inventory Prepaid expenses Total current assets $ 30,000 30,000 65,000 100,000 45,000 $270,000 $ 20,000 20,000 95,000 80,000 25,000 $240,000 Current liabilities Accounts payable Salaries payable Income tax payable Total current liabilities $140,000 40,000 20,000 $200,000 $110,000 30,000 15,000 $155,000 During 2016, credit sales and cost of goods sold were $800,000 and $500,000, respectively. Required: Compute the following liquidity measures for 2016: A. Current ratio. B. Acid-test ratio. C. Receivables turnover. D. Inventory turnover. 2. The income statement for XYZ for the year ended December 31, 2016, appears below. Sales Cost of goods sold Gross margin Expenses Net income $900,000 600,000 300,000 160,000* $ 140,000 *Includes $40,000 of interest expense and $30,000 of income tax expense. Additional information: 1. Common stock outstanding during 206 totaled 60,000 shares. 2. The market price of Ray's stock was $20 at the end of 2016. 3. Cash dividends of $20,000 were paid, $5,000 of which were paid to preferred stockholders. Required: Compute the following ratios for 2016: A. earnings per share. B. price-earnings. C. times-interest-earned ratio