Practice Question

Cat Incorporated Balance Sheet As of December 31, 2018 2018 2017 Assets Cash A/R Inventory Prepaid Expenses Total Current Assets $117,000$136,700 150,000 31,500 4,000 90,000 33,000 3,000 $302,500$262,700 Property, Plant, & Equipment Building Accumulated Depreciation Total PP&E 150,000 110,000 (70,000)(52,000) $58,000 $80,000 Total Assets $382,500$320,7 00 Liabilities & Owners' Equity Liabilities: Accounts Payable Salaries Payable Total Current Liabilities 5,000 7,500 12,500 7,600 10,100 17,700 Long-Term Liabilities: Bonds Payable Total Liabilities 75,000 92,700 60,000 72,500 Owners' Equity Common Stock Additional Paid-in Capital Retained Earnings Total Equity Total Liabilities & Equity 90,000 170,000 50,000 310,000 $382,500 76,000 140,000 12,000 228,000 $320,700 Compute and interpret the following ratios for 2018.- 1) Current Ratio 2) Quick Ratio 3) Inventory Turnover Ratio. Assume COGS were $100,000 4) Debt to Asset Ratio 5) A/R Turnover Ratio. Assume Sales were $500,000. 6) Compute Return on Assets. Assume Net Income was $33,000 7) Compute Return on Equity. Assume Net Income was $33,000. Cat Incorporated Balance Sheet As of December 31, 2018 2018 2017 Assets Cash A/R Inventory Prepaid Expenses Total Current Assets $117,000$136,700 150,000 31,500 4,000 90,000 33,000 3,000 $302,500$262,700 Property, Plant, & Equipment Building Accumulated Depreciation Total PP&E 150,000 110,000 (70,000)(52,000) $58,000 $80,000 Total Assets $382,500$320,7 00 Liabilities & Owners' Equity Liabilities: Accounts Payable Salaries Payable Total Current Liabilities 5,000 7,500 12,500 7,600 10,100 17,700 Long-Term Liabilities: Bonds Payable Total Liabilities 75,000 92,700 60,000 72,500 Owners' Equity Common Stock Additional Paid-in Capital Retained Earnings Total Equity Total Liabilities & Equity 90,000 170,000 50,000 310,000 $382,500 76,000 140,000 12,000 228,000 $320,700 Compute and interpret the following ratios for 2018.- 1) Current Ratio 2) Quick Ratio 3) Inventory Turnover Ratio. Assume COGS were $100,000 4) Debt to Asset Ratio 5) A/R Turnover Ratio. Assume Sales were $500,000. 6) Compute Return on Assets. Assume Net Income was $33,000 7) Compute Return on Equity. Assume Net Income was $33,000