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X f 2020 A B C Replace items & figures for your company in A&B Armstrong Company 2020 Statement of Financial Position Cash 17,500 Accounts receivable (net) 20,000 Inventory 50,000 Property, plant, and equipment (net) 70,000 Other non-current assets 42,500 Total assets $ 2.00,000 Current liabilities Long-term debt Share capital Contributed surplus Retained earnings Total liabilities and shareholders' equity $ 50,000 30,000 75,000 15,000 30.000 $ 2,00.000 Statement of Earnings Sales revenue Cost of sales Expenses (including interest and income tax) Net earninas P17-5 Part 1 $ 2,26,000 (1,22,500) (80,000) S 22.500 dy Type here to search Clipboard Font Alignment B4 2020 A B C $ 2,25,000 (1,22,500) (80,000) $ 22,500 19 20 Statement of Earnings 21 Sales revenue 22 Cost of sales 23 Expenses (including interest and income tax) 24 Net earnings 25 26 Other data: 27 Interest on long-term debt 28 Portion of sales on credit 29 Share price at end of 2020 30 Income tax rate 31 Dividends declared and paid in 2020 32 Number of common shares during 2020 33 34 Selected data from -1 statements: 35 Accounts receivable (net) 36 Inventory 37 Long-term debt 38 39 40 41 42 43 44 10% 1/3 18 30% 18,000 7,500 S + S 10,000 46,000 30.000 P17-5 Part 1 Ready Type here to search o F C = nm B 4 Part 1 INSTRUCTIONS: Calculate each ratio listed below. Use ending balances if average balances are not 5 available. 6 Armstrong 7 Company Blair Company 8 TESTS OF PROFITABILITY 9 Return on equity: 10 Net earnings Divide by shareholders' equity 12. Return on equity 13 14 Return on assets: 15 Long-term debt 16 Times interest rate 17 Interest expense Ignore tax in your ca 18 Add net earnings 19 Net earnings + Interest Expense Ignore tax in your ca 20 Divide by total assets 21 Return on assets 22 23 Financial leverage percentage: 24 Return on equity 25 Less: Return on assets 26 Financial leverage 27 NNNNN P17-5 Part 1 Ready 25 Less: Return on assets 26 Financial leverage 27 28 Earnings per share: 29 Net earnings 30 Divide by number of common shares 31 Earnings per share 32 33 Profit margin: 34 Net earnings 35 Divide by sales 36 Profit margin 37 38 Fixed asset turnover: 39 Sales 40 Divide by net fixed assets 41 Fixed asset turnover 42 43 TESTS OF LIQUIDITY 44 Cash ratio: 45 Cash 46 Divide by current liabilities 47 Cash ratio 48 49 Current ratio: 50 Current assets B D 49 Current ratio: 50 Current assets 51 Divide by current liabilities 52 Current ratio 53 54 Quick ratio: 55 Cash 56 Add: Accounts receivable 57 Quick assets 58 Divide by current liabilities 59 Quick ratio 60 61 Receivables tumover: 62 Sales 63 Times portion credit sales 64 Credit sales 65 Divide by average net Accounts receivable 66 Receivables turnover 67 68 Average age of Accounts receivable: 69 Days in a year 70 Divide by Accounts receivable turnover 71 Average age of Accounts receivable 72 73 Inventory turnover: 74 Cost of sales P17-5 Part 1 Ready B C 73 Inventory turnover: 74 Cost of sales 75 Divide by average inventory 76 Inventory turnover 77 78 79 TESTS OF SOLVENCY 80 Times interest earned: 81 Net earnings 82 Divide by (1- tax rate) 83 Net earnings before tax 84 Times tax rate 85 Income tax expense 86 87 Net earnings 88 Add interest expense 89 Add income tax 90 Net earnings before interest and taxes 91 Divide by interest expense 92 Times interest earned 93 94 Debt-to-equity ratio: 95 Total liabilities 96 Divide by shareholders' equity 97 Debt/equity ratio 98 P17-5 Part 1 91 Divide by interest expense 92 Times interest earned 93 94 Debt-to-equity ratio: 95 Total liabilities 96 Divide by shareholders' equity 97 Debt/equity ratio 98 99 MARKET TESTS 100 Pricelearnings ratio: 101 Market price per share 102 Divide by earnings per share 103 Pricelearnings ratio 104 105 Dividend yield ratio: 106 Dividends 107 Divide by number of common shares 108 Dividends per share 109 Divide by market price per share 110 Dividend yield ratio 111 112 113