Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Calculate the ratios for year 2 that are listed below: COMPANY XYZ Income Sheet Year 1 Year 2 Sales (all on credit) $1,400,000 $1,375,000 Cost

Calculate the ratios for year 2 that are listed below:

COMPANY XYZ

Income Sheet

Year 1

Year 2

Sales (all on credit)

$1,400,000

$1,375,000

Cost of Goods sold

850,000

900,000

Gross profit

$550,000

$475,000

Selling and administrative expense*

240,000

230,000

Operating profit (EBIT)

$310,000

245,000

Interest expense

40,000

37,000

Net income before taxes

$270,000

208,000

Taxes

81,000

62,400

Net income

$189,000

145,600

Shares

30,000

30,001

Earnings per share

$6.30

$4.85

*Includes $15,000 in lease payments for each year.

COMPANY XYZ

Balance Sheet Assets

Year 1

Year 2

Cash

$50,000

$55,000

Marketable securities

20,000

20,000

Accounts receivable

150,000

150,000

Inventory

200,000

210,000

Total current assets

$420,000

435,000

Net plant and equipment

650,000

650,000

Total assets

$1,070,000

$1,085,000

Liabilities and Stockholders Equity

Accounts payable

$175,000

190,000

Accrued expenses

25,000

25,000

Total current liabilities

$200,000

215,000

Long-term liabilities

310,000

310,000

Total liabilities

$510,000

525,000

Common stock ($2 par)

60,000

60,000

Capital paid in excess of par

190,000

190,000

Retained earnings

310,000

310,000

Total stockholders equity

$560,000

560,000

Total liabilities and stockholders equity

$1,070,000

$1,085,000

Create your response to this:

Ratio Description Ratio

Formula - showing numbers (labels)

435,000 (Current Assets)/215,000 (Current Liabilities)

Current Ratio

Quick Ratio (Acid Test Ratio)
Days Sales Outstanding (Average Collection Period)
Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover
Debt Ratio
Times Interest Earned
Gross Profit Margin
Net Profit Margin
Return on Assets
Return on Equity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Atomic Audit The Costs And Consequences Of US Nuclear Weapons Since 1940

Authors: Stephen I. Schwartz

1st Edition

0815777736, 978-0815777731

More Books

Students also viewed these Accounting questions

Question

3. Identify cultural universals in nonverbal communication.

Answered: 1 week ago