Question
The comparative statements of Larker Tool SA are presented below. Larker Tool SA Income Statement For the Years Ended December 31 2020 2019 Net sales
The comparative statements of Larker Tool SA are presented below.
Larker Tool SA Income Statement For the Years Ended December 31 | |||
| 2020 |
| 2019 |
Net sales | R$1,818,500 |
| R$1,750,500 |
Cost of goods sold | 1,011,500 |
| 996,000 |
Gross profit | 807,000 |
| 754,500 |
Selling and administrative expense | 516,000 |
| 479,000 |
Income from operations | 291,000 |
| 275,500 |
Interest expense | 15,000 |
| 14,000 |
Income before income taxes | 276,000 |
| 261,500 |
Income tax expense | 84,000 |
| 77,000 |
Net income | R$ 192,000 |
| R$ 184,500 |
Larker Tool SA Statements of Financial Position December 31 | |||||||
Assets | 2020 |
| 2019 | ||||
Plant assets (net) |
|
| R$600,300 |
|
|
| R$520,300 |
Current assets |
|
|
|
|
|
|
|
Inventory | R$110,950 |
|
|
| R$115,500 |
|
|
Accounts receivable (net) | 105,750 |
|
|
| 102,800 |
|
|
Short-term investments | 69,000 |
|
|
| 50,000 |
|
|
Cash | 60,100 |
| 345,800 |
| 64,200 |
| 332,500 |
Total assets |
|
| R$946,100 |
|
|
| R$852,800 |
Equity and Liabilities | 2020 |
| 2019 |
Equity |
|
|
|
Share capitalordinary (R$5 par) | R$300,000 |
| R$300,000 |
Retained earnings | 242,600 |
| 165,400 |
Total equity | 542,600 |
| 465,400 |
Bonds payable | 200,000 |
| 200,000 |
Current liabilities |
|
|
|
Accounts payable | 160,000 |
| 145,400 |
Income taxes payable | 43,500 |
| 42,000 |
Total current liabilities | 203,500 |
| 187,400 |
Total liabilities | 403,500 |
| 387,400 |
Total equity and liabilities | R$946,100 |
| R$852,800 |
All sales were on account.
Which of the following ratio of 2020 is/are Correct? (The answer may have single or both above)
a. The times interest earned is 19.4 times.
b. Return on assets is 21.3% and return on ordinary shareholder's equity is 38.1%.
c. The EPS is R$3.2 if the weighted-average ordinary shares in 2020 were 60,000.
d. The current ratio is 1.15:1.
e. The accounts receivable turnover is 17.4 times while the inventory turnover is 16.1 times.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started