Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

With the information provided find the Liquidity ratio, Solvency ratio, and Profitability ratio Liquidity Ratios 1. Current Ratio= Current Assets /Current Liabilities 2. Quick Ratio=

With the information provided find the Liquidity ratio, Solvency ratio, and Profitability ratio

image text in transcribedimage text in transcribedimage text in transcribed
Liquidity Ratios 1. Current Ratio= Current Assets /Current Liabilities 2. Quick Ratio= Cash, Marketable Securities, Accounts Rec./ Current Liabilities 3. Accounts Receivable Turnover= Total Revenue/Average Accounts Receivable* * Average Accounts Receivable=Accounts Rec. at the Beginning and End of the year/2 4. Days to Collect = 365/Accounts Receivable Turnover 5. Inventory Turnover = Cost of Goods Sold/Average Inventory* * Average Inventory = Inventory at the Beginning and End of the year/2 6. Days on hand = 365/inventory turnover 7. Payable Turnover = Cost of Goods Sold/Average Accounts Payable* * Average Accounts Payable = Accounts Payable at the Beginning and End of the year/2 8.Days to pay = 365/payable turnover Solvency ratios 1.Debt to Equity Ratio = Total Liabilities/Total Owners' Equity 2.Number of times interest Earned = EBIT/interest Expense EBIT = Earnings before interest & taxes - easiest way to find is to take net income + interest + taxes Profitability Ratios 1.Profit Margin = Net Income/Net Revenue 2.Assets Turnover = Net Sales/Average total assets* * Average Total Assets - Total Assets at the Beginning and End of the year/2 3. Return on Assets = Net Income/Average Total Assets* * Average Total Assets - Total Assets at the Beginning and End of the year/2 4. Return on Equity = Net Income/Average Equity* * Average Equity=Owners' Equity at the Beginning and End of the year/2Alexander Company Comparative Balance Sheets December 31, 2018 and December 13, 2019 Assets 2018 2019 Difference Cash 40,000 334,000 294,000 Accounts Receivable 255,000 215,000 (40,000) Inventory 430,000 350,000 (30,000) Prepaid Expenses 2,000 1,200 (800) Plant Property 8: Equipment 1,104,000 1,256,000 152,000 Accumulated Depr - Equipment (280,000) (366,000) (86,000) Total Assets 1,551,000 1,790,200 239,200 Liabilities & Stockholder's Equity Accounts Payable 74,000 118,000 44,000 Notes Payable (Current) 160,000 60,000 (100,000) Accrued Liabilities 51,000 67,000 16,000 Mortgage Payable 560,000 720,000 160,000 Common Stock $10 par value 400,000 400,000 - Retained Earnings 306,000 425,200 119,200 Total Liabilities 8; S/E 1,551,000 1,790,200 239,200 Alexander Company Income Statement December 31, 2014 Sales 3,729,000 Cost of Goods Sold 1,127,800 Gross Prot 2,602,200 Operating Expenses 1,949,400 Operating Expenses 1,949,400 Operating Income 752,800 Interest expense 459,000 Alexander Company Income before income taxes 293,800 Income tax expense 54,600 Net Income 239,200 Additional information: 1. Paid dividends of $76,000 2. Market price $435.00

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Value

Authors: Stephen Penman, S Penman

1st Edition

0231151187, 9780231151184

More Books

Students also viewed these Accounting questions