MEGAFRAME COMPUTER COMPANY Balance Sheet As of December 31 ASSETS Cash Accounts

Question

MEGAFRAME COMPUTER COMPANY Balance Sheet As of December 31 ASSETS Cash Accounts receivable Inventory Net plant and equipment Total assets $50,000 70,000 110,000 220 000 $450,000 LABILITESAND STOCKHOLDERS' EQUITY Accounts payable Accrued expenses Long-term debt Common stock Paid-in capital Retained earning:s $70,000 50,000 130,000 70,000 40,000 90,000 $450,000 Total liabilities and stockholders equity MEGATRAME COMPUTER COMPANY Income Statement For the year ended December 31 Sales (all on credit Cost of goods sold Gross profit 00,000 275,000 Sales and administrative expenses epreciation Operating profit Interest expense Profit before taxes $190,000 30% Net income axes 51155001 h the weh

Explanation / Answer

Solution 1:

After tax profit margin of Mega frame computer company = Net Income / Sales

= $115,500 / $875,000 = 13.2%

Solution 2:

Mega frame Quick ratio = Quick assets / Current liablities

Quick Assets = Cash + Accounts receivables = $50,000 + $70,000 = $120,000

Current liabilities = Accounts payable + Accrued expenses = $70,000 + $50,000 = $120,000

Quick ratio = $120,000 / $120,000 = 1:1

Solution 3:

Total Assets turnover = Sales / Total Assets

= $875,000 / $450,000 = 1.944 times

Solution 4:

After tax profit margin = Net Income / Sales = $136,500 / $500,000 = 27.3%

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