Question
Create an Excel spreadsheet to organize your answers to the following problem, and submit your Excel file as an attachment by clicking on the appropriate
Create an Excel spreadsheet to organize your answers to the following problem, and submit your Excel file as an attachment by clicking on the appropriate button on this page.
A firm had the following abbreviated income statement for 2020 and abbreviated balance sheets at the end of 2020 and 2021.
| 2020 | |
| Sales | $600,000 |
| Less Cost of goods sold | 320,000 |
| Gross Profit | 280,000 |
| Less Operating expenses | 190,000 |
| Less Depreciation | 30,000 |
| Operating Income (EBIT) | 60,000 |
| Less Interest expense | 20,000 |
| Earnings Before Taxes (EBT) | 40,000 |
| Less Income tax | 14,000 |
| Earnings After Tax (Net Income) | $26,000 |
| 2020 | 2021 | |
| Cash | $13,000 | $15,000 |
| Marketable securities | 41,000 | 40,000 |
| Accounts receivable | 22,000 | 25,000 |
| Inventory | 60,000 | 60,000 |
| Prepaid expenses | 11,000 | 20,000 |
| Buildings (net) | 620,000 | 600,000 |
| Equipment (net) | 109,000 | 100,000 |
| Total Assets | $876,000 | $860,000 |
| Accounts payable | 20,000 | 40,000 |
| Wages payable | 5,000 | 3,000 |
| Bonds payable | 414,000 | 364,000 |
| Total Liabilities | 439,000 | 407,000 |
| Common stock | 200,000 | 200,000 |
| Retained Earnings | 237,000 | 253,000 |
| Total Equity | 437,000 | 453,000 |
| Total Liabilities & Equity | $876,000 | $860,000 |
The company paid a dividend in 2021 of $10,000. All sales are made on account.
Required:
A. Calculate the current ratio at the end of 2021. _______________
B. Calculate the quick ratio at the end of 2021. ________________
C. Calculate the working capital at the end of 2021. _______________
D. Calculate average age of accounts receivable during 2021. _______________
E. Calculate the inventory turnover during 2021. _________________
F. Calculate the average age of accounts payable during 2021. _____________
G. Calculate the accounts receivable turnover during 2021. _____________
H. Calculate the pre-tax profit margin for 2021. ____________
I. Calculate the cash conversion cycle, in days during 2021. _____________
J. Calculate the debt/equity ratio at the end of 2021. ________________
K. Calculate the debt ratio at the end of 2021. ______________
L. Calculate the times interest earned ratio for 2021. _______________
M. Calculate the dividend payout ratio for 2021. _________________
N. Calculate the gross profit margin for 2021. _____________
O. Calculate the operating profit margin for 2021. ____________
P. Calculate the net profit margin for 2021. _______________
Q. Calculate the return on assets (ROA) for 2021. _________________
R. Calculate the total asset turnover during 2021. _______________
S. Calculate the return on equity (ROE for 2021. ______________
T. Calculate the marginal tax rate for 2021. _________________
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Cornerstones Of Financial Accounting
Authors: Jay Rich, Jeff Jones, Maryanne Mowen, Don Hansen
2nd Edition
0538473452, 9780538473453
