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Please can you type out the answer (do not write out), thanks Consider the data for Ryan Company in Exhibit 12-15 2. Assume all sales
Please can you type out the answer (do not write out), thanks
Consider the data for Ryan Company in Exhibit 12-15 2. Assume all sales are on credit. 1. Compute the following ratios for the years 20X2 and 20X3: a. Percentage of net income to stockholders' equity (ROE) b. Gross profit rate c. Percent of net income to sales d. Ratio of total debt to stockholders' equity (define total debt as total liabilities) e. Inventory turnover f. Current ratio g. Average collection period for accounts receivable EXHIBIT 12-15 Ryan Company Balance Sheets and Income Statements ($ in thousands) December 31 20X3 20X2 20X1 Cash $ 30 $ 25 $ 20 Accounts receivable 90 70 50 Merchandise inventory 80 70 60 Prepaid expenses 10 10 10 Land 30 30 30 Building 70 75 80 Equipment 60 50 40 Total assets $370 $330 $290 Accounts payable $ 50 $ 40 $ 30 Taxes payable 20 15 10 Accrued expenses payable 15 10 5 Long-term debt 45 45 45 Paid-in capital 150 150 150 Retained earnings 90 70 50 Total liabilities and stockholders' equity $370 $330 $290 Year Ended December 31 20X3 20X2 Sales (all on credit) $800 $750 Cost of goods sold 435 410 Operating expenses 305 295 Pretax income 60 45 Income taxes 20 15 Income taxes 20 15 Net income $ 40 $ 30 2. For each of the following items, indicate whether the change from 20X2 to 20X3 for Ryan Company seems to be favorable or unfavorable, and identify the ratios you computed previously that most directly support your answer. The first two items that follow are given as an example. a. Return to owners, favorable, a b. Gross profit rate basically unchanged, b (increased from 45.3% to 45.6%, could answer favorable) c. Ability to pay current debts on time d. Collectibility of receivables e. Risks of insolvency f. Salability of merchandise g. Return on sales h. Overall accomplishment i. Coordination of buying and selling functions j. Screening of risks in granting credit to customersStep by Step Solution
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