Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bett Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital Current ratio Quick ratio Accounts receivable turnover Number of days' sales in receivables Inventory turnover Number of days' sales in inventory Ratio of fixed assets to long-term liabilities Ratio of liabilities to stockholders' equity Times interest earned $3,093,000-$860,000 $3,093,000+ $860,000 $1,866,000+ $860,000 V $8,260,000+ [($714,000+ $740,000) + 2] [($714,000+ $740,000) + 2] + ($8,260,000 + 365) $4,100,000+ [($1,072,000 +$1,100,000) + 2] [($1,072,000+ $1,100,000) + 2] + ($4,100,000+ 365) $2,690,000+ $1,690,000 $2,550,000+ $4,057,000 ($976,800+$127,000) +$127,000 Eensbask Print em Balance Sheet Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Current assets: Balance Sheet December 31, 2016 Assets Cash $823,000 Marketable securities Accounts receivable (net) 329,000 714,000 Inventory 1,072,000 Prepaid expenses 155,000 Total current assets 3,093,000 Long-term investments 824,000 Property, plant, and equipment (net) 2,690,000 Total assets 6,607,000 Liabilities Current liabilities Long-term abilities 860,000 1,690,000 Total liabilities 2,550,000 Stockholders' Equity Stockholders' Equity Preferred stock, $10 par Common stock, $5 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 487,500 1,250,000 2,319,500 4,057,000 6,607,000 Feedback Check Mic Work Profitability Measures Match each computation to one of the profitability measures in the table. Profitability Measures Asset turnover. Return on total assets Return on stockholders' equity Return on common stockholders' equity Earnings per share on common stock Price-earnings ratio Dividends per share Dividend yield Computations $8,260,000+ [($5,783,000 +$5,593,000) + 2] ($791,340 + $127,000) + [($6,607,000+ $6,417,000) + 2] $791,340+ [($4,057,000+ $3,854,150) + 2] ($791,340-$65,000) + [($3,569,500+ $3,426,720) + 2] ($791,340-$65,000) + 250,000 shares $35+ $3.05 $175,000 + 250,000 shares $0.70+ $35 Print tem Comparative Income Statement Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If