Question
. The Professor must be able to see formulas in the Excel formula bar in order for the student to receive credit. Part 1. Financial
. The Professor must be able to see formulas in the Excel formula bar in order for the student to receive credit.
Part 1. Financial Ratios
Please compute the 6 ratios requested below for the Purple Company as of and for the year ended December 31, 2023. Please refer to Illustration 4B.1 on page 4-34 of our textbook for a summary of financial ratios and formulas. Compute each ratio to 2 decimal places using excel rounding.
The 6 ratios you should compute are:
- Current ratio
- Inventory turnover
- Asset turnover
- Return on assets
- Earnings per share
- Debt to assets ratio
Compute the 6 ratios using the following data:
Current assets $27,210,000
Current liabilities $16,000,000
Net sales $83,200,000
Accounts receivable beginning of year $ 6,100,000
Accounts receivable end of year $ 7,500,000
Cost of goods sold $58,920,000
Inventory beginning of year $ 6,200,000
Inventory end of year $ 7,825,000
Net income $ 4,360,000
Preferred dividends $ 200,000
Weighted-average common shares outstding 500,000
Outstanding shares 500,000
Total liabilities $21,860,000
Total assets $47,100,000
Average total assets $46,345,000
Common stockholders equity $25,000,000
Part 2. Preparing a Bank Reconciliation
Prepare a bank reconciliation for the Purple Company as of December 31, 2023. Use the format shown in Example 6A.1 at the top of page 6-41 (this is in Appendix 6A) of our textbook. The heading should contain the name of Purple Companys Bank: Main Street Bank.
The data you will need is as follows:
Balance per bank statement as of December 31, 2023 $82,465
Deposits in transit as of December 31, 2023 $ 9,775
Outstanding checks as of December 31, 2023 $16,170
Correct Cash Balance as of December 31, 2023 $76,070
Balance per Books as of December 31, 2023 $75,795
Interest collected by the bank in December, 2023
but not recorded in Purples books as of
December 31, 2023 $ 600
A Not Sufficient Funds (i.e. NSF) check was
recorded by the bank in December, 2023 but
not recorded in Purples books as of
December 31, 2023 $ 325
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