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 m many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and 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 Balance Sheet Use the following balance sheet form to enter amounts you identity from the computations on the Liquidity and Solvency Measures part. amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the rati Compute any missing amounts. Balance Sheet December 31, 2016 Assets amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount Compute any missing amounts. Balance Sheet December 31, 2016 Assets Current assets: Cash $823,000 Marketable securities 329,000 Accounts receivable (net) 714,000 Inventory 1,072,000 157,000 3,095,000 Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) Total assets 824,000 2,690,000 6,609,000 Liabilities Current liabilities 840,000 Long-term liabilities 1,690,000 Total liabilities 2,530,000 Stockholders' Equity Preferred stock, $10 par 487,500 Common stock, $5 par Retained earnings 1,250,000 2,341,500 4,079,000 Total stockholders' equity Calculator Total stockholders' equity 4,079,000 6,609,000 Total liabilities and stockholders' equity $ Profitability Measures Match each computation to one of the profitability measures in the table. Profitability Measures Asset turnover Return on total assets Computations $8,250,000 : [($5,781,000 + $5,591,000) + 2] ($786,300 + $127,000) [($6,605,000 + $6,415,000) + 2] $786,300 + [($4,035,000 + $3,833,250) = 2] ($786,300 - $65,000) = [($3,547,500 + $3,405,600) = 2] Return on stockholders' equity Return on common stockholders' equity Earnings per share on common stock