Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Accounts receivable turnover $4,100,000 + [($1,072,000+ $1,100,000) + 2] Ratio of liabilities to stockholders' equity $2,530,000+ $4,077,000 Number of days' sales in inventory Quick ratio Working capital Inventory turnover Times interest earned Number of days' sales in receivables Ratio of fixed assets to long-term liabilities Current ratio Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures panel. You will identify other amounts for the balance sheet on the Profitability Measures panel. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 20Y6 1 Assets 2 Current assets: 3 Cash $823,000.00 4 Marketable securities 5 Accounts receivable (net) 6 Inventory 7 Prepaid expenses 8 Total current assets 9 Long-term investments 10 Property, plant, and equipment (net) 11 Total assets 12 Liabilities 13 Current liabilities 16 14 Long-term liabilities 15 Total liabilities Stockholders' Equity 17 Preferred stock, $10 par 18 Common stock, $5 par 19 Retained earnings 20 Total stockholders' equity 21 Total liabilities and stockholders' equity Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Accounts receivable turnover $4,100,000 + [($1,072,000+ $1,100,000) + 2] Ratio of liabilities to stockholders' equity $2,530,000+ $4,077,000 Number of days' sales in inventory Quick ratio Working capital Inventory turnover Times interest earned Number of days' sales in receivables Ratio of fixed assets to long-term liabilities Current ratio Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures panel. You will identify other amounts for the balance sheet on the Profitability Measures panel. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 20Y6 1 Assets 2 Current assets: 3 Cash $823,000.00 4 Marketable securities 5 Accounts receivable (net) 6 Inventory 7 Prepaid expenses 8 Total current assets 9 Long-term investments 10 Property, plant, and equipment (net) 11 Total assets 12 Liabilities 13 Current liabilities 16 14 Long-term liabilities 15 Total liabilities Stockholders' Equity 17 Preferred stock, $10 par 18 Common stock, $5 par 19 Retained earnings 20 Total stockholders' equity 21 Total liabilities and stockholders' equity
