BUS-FP4061 - Managerial Accounting Principles

Assessment 10: Ratio Analysis Worksheet

Problem 1

Solve the given problem based on the following scenario.

Megacorp's balance sheet and income statement, including all credit sales, are given in the table below.

As of December 31, 2012:

Inventories were $46,500.

Total assets were $178,500.

Common stock was $90,000.

Retained earnings were $20,600.

Megacorp Income Statement (December 31, 2013)

Sales

$ 349,500

Cost of goods sold

238,250

Gross profit

111,250

Operating expenses

51,250

Interest expenses

4,000

Income before taxes

56,000

Taxes (at 30%)

16,800

Net income

$ 39,200

Megacorp Balance Sheet (December 31, 2013)

Assets

Amount ($)

Liability and Equity

Amount ($)

Cash

10,000

Accounts payable

17,000

Short-term investment

7,500

Accrued wages payable

2,500

Accounts receivable

28,000

Income taxes payable

3,000

Notes receivable

3,500

Notes payable (long-term)

64,500

Inventory

31,150

Common stock

90,000

Prepaid expenses

1,650

Retained earnings

59,800

Plant

155,000

Total assets

236,800

Total liability and equity

236,800

Compute the following and show your work.

Ratio

Calculation

Current ratio

Days' sales uncollected

Days' sales in inventory

Times interest earned

Total asset turnover

Return on common stockholders' equity

Acid-test ratio

Inventory turnover

Debt-to-equity ratio

Profit margin ratio

Return on total assets