HW 1D

Question 1

Canadian Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, calculate the firms current ratio.

Round the answers to two decimal places

Balance Sheet December 31, 2015

Cash and marketable securities $187,000 Accounts payable $217,000

Accounts receivable $498,000 Notes payable $51,500

Inventories $799,000 Accrued expenses $58,300

Prepaid expenses $19,300 Total current liabilities $326,800

Total current assets $1,503,300 Long-term debt $215,400

Gross fixed assets $1,978,000 Par value and paid-in-capital $128,000

Less: accumulated depreciation $478,000 Retained Earnings $2,333,100

Net fixed assets $1,500,000 Common Equity $2,461,100

Total assets $3,003,300 Total liabilities and owners equity $3,003,300

Income statement, Year of 2015

Net sales (all credit) $5,386,600.00

Less: Cost of goods sold $3,716,754.00

Selling and administrative expenses $329,000.00

Depreciation expense $138,000.00

EBIT $1,202,846.00

Interest expense $39,600.00

Earnings before taxes $1,163,246.00

Income taxes $465,298.40

Net income $697,947.60

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