Question
The financial statements of Morgan Ltd appear below: Morgan LTD Comparative Statement of Financial Position 31 December 2018 ________________________________________________________________________________________ Assets 2018 2017 Cash .................................................................................................. $
The financial statements of Morgan Ltd appear below:
Morgan LTD
Comparative Statement of Financial Position
31 December 2018
________________________________________________________________________________________
Assets 2018 2017
Cash .................................................................................................. $ 25,000 $ 40,000
Marketable securities ........................................................................... 15,000 60,000
Accounts receivable (net) ..................................................................... 50,000 30,000
Inventory ............................................................................................ 150,000 170,000
Property, plant and equipment (net) ...................................................... 160,000 200,000
Total assets .................................................................................. $400,000 $500,000
Liabilities and equity
Accounts payable ................................................................................ $ 20,000 $ 30,000
Short-term notes payable ..................................................................... 40,000 90,000
Bonds payable .................................................................................... 80,000 160,000
Ordinary shares .................................................................................. 170,000 145,000
Retained earnings ............................................................................... 90,000 75,000
Total liabilities and equity................................................................ $400,000 $500,000
Morgan LTD
Income Statement
For the Year Ended 31 December 2018
Net sales ............................................................................................ $360,000
Cost of sales ....................................................................................... 184,000
Gross profit ......................................................................................... 176,000
Expenses
Interest expense ............................................................................ $24,000
Selling expenses ........................................................................... 30,000
Administrative expenses ................................................................ 20,000
Total expenses ........................................................................ 74,000
Profit before income taxes ................................................................... 102,000
Income tax expense ............................................................................ 30,000
Profit .................................................................................................. $ 72,000
Additional information:
a. Cash dividends of $57,000 were declared and paid in 2018.
b. Weighted-average number of shares of ordinary shares outstanding during 2018 was 60,000 shares.
c. Market value of ordinary shares on 31 December 2018 was $18 per share.
d. Net cash provided by operating activities for 2018 was $63,000.
Required
Using the financial statements and additional information, compute the following ratios for Morgan Ltd for 2018. Show all computations.
1. Current ratio
2. Return on ordinary shareholders equity
3. Price-earnings ratio
4. Acid-test/Quick ratio
5. Receivables turnover
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