The ratios set forth below are identified as significant in the current and prior years' audits of XYZInc. Using the XYZ Company Balance Sheet and Income Statement Calculate the 20X2 ratios then compare the values of each ratio. Ratios using balance sheet numbers are based on end-of year balances.<\/p>
XYZ Company<\/p>
Balance Sheet <\/p>
December 31, 20X2 <\/p>
<\/p>
Cash $ 240,000<\/p>
Accounts receivable 400,000<\/p>
Inventory 600,000<\/u><\/p>
Total current assets 1 ,240,000 <\/p>
Plant and equipment, net 760,000<\/p>
Total assets $ 2,000,000 <\/u><\/p>
<\/p>
<\/p>
Accounts payable $ 160,000 <\/p>
Notes payable100,000<\/p>
Other current liabilities 140,000 <\/u><\/p>
Total current liabilities 400,000<\/p>
Long-term debt350,000<\/p>
Common stock 750,000<\/p>
Retained earnings500,000<\/u> <\/p>
Total liability and capital $ 2,000,000 <\/u><\/p>
<\/p>
<\/p>
<\/p>
<\/p>
<\/p>
<\/p>
<\/p>
<\/p>
<\/p>
XYZ Company <\/p>
Income Statement<\/p>
For the Year Ended December 31, 2017 <\/p>
<\/p>
Sales $ 3,000,000<\/p>
Cost of goods sold <\/p>
Materials800,000 <\/p>
Labor 700,000 <\/p>
Overhead 300,000 1,800,000<\/u><\/p>
Gross margin 1,200,000<\/p>
Selling expenses 240,000 <\/p>
General and administrative expenses300,000<\/u><\/p>
Operating income660,000 <\/p>
Less: Interest expense (40,000) <\/p>
Income before taxes 620,000 <\/p>
Less: Federal income taxes ( 220,000) <\/u><\/p>
Net Income $ 400,000 <\/u><\/p>
<\/p>
Ratios 12\/31\/x2 12\/31\/X1 <\/p>
<\/p>
Current ratio ?2.5 <\/p>
Quick ratio ? 1 .3 <\/p>
Accounts receivable? 5.5<\/p>
Inventory turnover ? 2.5<\/p>
Total asset turnover ? 1.2<\/p>
Gross margin % ? 35% <\/p>
Net operating margin % ? 25% <\/p>
Times interest earned? 10.3<\/p>
Total debt to equity % ? 50% <\/p>", "transcribed_text": "", "related_book": { "title": "Principles Of Accounting Volume 2 Managerial Accounting", "isbn": "0357364805, 9780357364802", "edition": "1st Edition", "authors": "OpenStax", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2022\/04\/626124ab6f7b1_547626124ab246f0.jpg", "uri": "\/textbooks\/principles-of-accounting-volume-2-managerial-accounting-1st-edition-9780357364802", "see_more_uri": "" }, "free_related_book": { "isbn": "B09M79JVJ1", "uri": "\/textbooks\/preparations-for-appearances-at-the-public-accounts-committee-of-the-national-assembly-1st-edition-979-8773545248-311321", "name": "Preparations For Appearances At The Public Accounts Committee Of The National Assembly", "edition": "1st Edition" }, "question_posted": "2024-06-28 09:46:17", "see_more_questions_link": "\/study-help\/questions\/business-general-management-2023-February-20", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/journalize-the-following-transactions-using-the-allowance-method-of-accounting-194973", "description": "Journalize the following transactions, using the allowance method of accounting for uncollectible receivables: Oct. 2. 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