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i mybusinesscourse.com 01-201920 Fund of Health into Systers Menu CLICK HERE TO REVIEW LEARNING OBjECTIVES QUESTION 7 Answer saved Marked out of 12.00 FFlag question Profitability, Liquidity, and Solvency Ratios O'Neill Corporation gathered the following information from its 2013 Answer saved Marked out of 12.00 P question financial statements Net Sales Net Income Cash provided by Operating Activities $288,000 75,000 93,000 Expenditures on Property, Plant and Equipment 14,000 48,500 27,000 138,000 97,500 Current Assets Current Liabilities Total Assets Total Liabilities Using the above data, calculate the following (1) return on sales ratio, (2) current ratio, (3) debt-to-total-assets ratio, and (4) free cash flow. (Round return on sales and debt-to-total assets ratios to one decimal point and round current ratio to two decimal points.) Return on Sales Ratio Current Ratio Debt-to Total Assets Ratio 0% Free Cash Flow Finish attempt... Save Answers Previous page 888 Fa F7 F8 FSExplanation / Answer
Solution;
Answer 1. The return on sales ratio as follows:
Return on sales ratio = Net income / sales
= $75,000 / $2,88,000
Answer 2. Current ratio as follows:
Current ratio = Current assets / Current liabilities
= $48,500 / $27,000
Answer 3. Debt to total assets ratio as follows:
Debt to total assets ratio = Total liabilities / total assets
= $97,500 / $1,38,000
Answer 4. Free cash flow as follows:
Free cash flow =
(cash provided by operating activity) - (Expenditure on property, plant and equipment)
= $93,000 - $14,000
Return on sales ratio = 26.04%Related Questions
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