Question

1 Approved Answer

Posted on Aug 23, 2024

2018 2019 Accounts Payablo $ 100,000 $ 40,000 Current Labilities 50,000 11,000 Bonds Payablo 240,000 300,000 100,000 Common Stock, $10 Par 100,000 51,000 51,000 Additional

image text in transcribed

2018 2019 Accounts Payablo $ 100,000 $ 40,000 Current Labilities 50,000 11,000 Bonds Payablo 240,000 300,000 100,000 Common Stock, $10 Par 100,000 51,000 51,000 Additional Paid-In Capital Retained Eamings 399,000 338.000 $1,000,000 $780,000 The restricted cash is $10,000 in 2018 and $10,000 in 2019 to make a long term-investment. The allowances for doubtful accounts are $ 10,000 in 2018 and $ 20,000 in 2019 The capitalized interest is $ 5,000 in 2018 and $5,000 in 2019. The operating lease in 2019 is $ 30,000, 1/3 is considered as interest. The principal payments are every year $ 20,000. Required: Compute for the 2019 the following ratios and interpret the financial situation of ABC Company 1. The times interest eamed ratio (0.75 Mark): 2. The fixed charge ratio (0.75 Mark) 3. The accounts receivable turnover (1Mark) 4. The accounts receivable turnover in days (1 Mark) 5. The inventory turnover (1 Mark) 6. The inventory turnover in days (1 Mark) 7. The operating cycle (0.75 Mark) 8. The current ratio (1 Mark) 9. The Debt ratio (0.75 mark) 10. The debt to tangible net worth (1 Mark) Comparative data for ABC Company for the two-year period 2018-2019 are precated below Incomo Statement Data 2018 2019 Net Sales $1,200,000 Cost of Goods Sold $1,500,000 834.000 $ 566,000 376,000 Gross Profit Operating Expense Operating Income Other Expense (interest) Eamings Before Income Tax 741.000 $ 459,000 277,000 $ 182,000 12.000 $ 190,000 15.000 $ 175,000 $ 170,000 Income Taxes 66.000 71.000 Net Income $ 109,000 $ 99,000 Balance Sheet Data Assets 2018 2019 Cash $ 30,000 $ 10,000 Receivables (net) 130,000 90,000 Inventory 170,000 113,000 547,000 650,000 Land, Buildings, and Equipment (net) Intangible Assets 20,000 20,000 $1,000,000 $780,000 Liabilities and Stockholders' Equity AL MacBook Air 2018 2019 Accounts Payablo $ 100,000 $ 40,000 Current Labilities 50,000 11,000 Bonds Payablo 240,000 300,000 100,000 Common Stock, $10 Par 100,000 51,000 51,000 Additional Paid-In Capital Retained Eamings 399,000 338.000 $1,000,000 $780,000 The restricted cash is $10,000 in 2018 and $10,000 in 2019 to make a long term-investment. The allowances for doubtful accounts are $ 10,000 in 2018 and $ 20,000 in 2019 The capitalized interest is $ 5,000 in 2018 and $5,000 in 2019. The operating lease in 2019 is $ 30,000, 1/3 is considered as interest. The principal payments are every year $ 20,000. Required: Compute for the 2019 the following ratios and interpret the financial situation of ABC Company 1. The times interest eamed ratio (0.75 Mark): 2. The fixed charge ratio (0.75 Mark) 3. The accounts receivable turnover (1Mark) 4. The accounts receivable turnover in days (1 Mark) 5. The inventory turnover (1 Mark) 6. The inventory turnover in days (1 Mark) 7. The operating cycle (0.75 Mark) 8. The current ratio (1 Mark) 9. The Debt ratio (0.75 mark) 10. The debt to tangible net worth (1 Mark) Comparative data for ABC Company for the two-year period 2018-2019 are precated below Incomo Statement Data 2018 2019 Net Sales $1,200,000 Cost of Goods Sold $1,500,000 834.000 $ 566,000 376,000 Gross Profit Operating Expense Operating Income Other Expense (interest) Eamings Before Income Tax 741.000 $ 459,000 277,000 $ 182,000 12.000 $ 190,000 15.000 $ 175,000 $ 170,000 Income Taxes 66.000 71.000 Net Income $ 109,000 $ 99,000 Balance Sheet Data Assets 2018 2019 Cash $ 30,000 $ 10,000 Receivables (net) 130,000 90,000 Inventory 170,000 113,000 547,000 650,000 Land, Buildings, and Equipment (net) Intangible Assets 20,000 20,000 $1,000,000 $780,000 Liabilities and Stockholders' Equity AL MacBook Air