Question
Financial ratios computed for Whittaker, Inc., include the following: Current ratio 2.2 to 1 Acid-test ratio 1.2 to 1 Debt/equity ratio 2.2 to 1 Inventory
Financial ratios computed for Whittaker, Inc., include the following:
Current ratio | 2.2 | to 1 | |
Acid-test ratio | 1.2 | to 1 | |
Debt/equity ratio | 2.2 | to 1 | |
Inventory turnover | 2.5 | times | |
Accounts receivable turnover | 5.7 | times | |
Times interest earned | 4.75 | times | |
Gross profit ratio | 40 | % | |
Return on investment | 10.94 | % | |
Earnings per share | $ | 7.44 | |
All sales during the year were made on account. Cash collections during the year exceeded sales by $16,000, and no uncollectible accounts were written off.
The balance of the accounts receivable account was $44,000 on January 1, 2017.
No common stock was issued during the year.
Dividends declared and paid during the year were $5,608.
The balance of the inventory account was $43,496 on January 1, 2017.
Interest expense on the income statement relates to the 10% bonds payable; $12,000 of these bonds were issued on May 1, 2017; the remaining amount of bonds payable were outstanding throughout the year. All bonds were issued at face amount.
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