The statement of cash flows of Aqua Company for the current year includes the fo

Question

The statement of cash flows of Aqua Company for the current year includes the following information: Net Income $ 77,225 Adjustments Add Depreciation 6,685 Add the decrease in Accounts receivable 4,930 Add the decrease in Inventory 377 Subtract the increase in Prepaid expenses (362 ) Subtract the decrease in Accounts payable (1,252 ) Net cash provided by operating activities $ 87,603 Cash provided by sale of property, plant and equipment $ 1,235 Cash provided by sale of short-term investments 1,473 Cash used for purchases of property, plant and equipment (9,010 ) Cash used for purchases of short-term investments (808 ) Net cash used in investing activities $ (7,110 ) The company's income statement for the current year is as follows: Sales revenue $ 159,331 Cost of goods sold 61,260 Gross profit 98,071 Selling, general and administrative expenses 8,900 Depreciation 6,685 Total Operating expenses 15,585 Operating income 82,486 Interest expense 2,847 Net income before taxes 79,639 Income tax expense 3,494 Net income $ 76,145 The balance sheet reports that the beginning balances in interest payable and income taxes payable were the same as their respective ending balances. Required: (a) Calculate the capital acquisitions ratio.(Round your answer to 2 decimal places.) Capital acquisitions ratio (b) Calculate the quality of income ratio. (Round your answer to 2 decimal places.) Quality of income ratio

Explanation / Answer

Ryan Company is the first set of numbers.............Priest Company is the second set of numbers ______________________________________… Data from the current year-end balance sheets Assets Cash $18,500 $34,000 Accounts receivable, net 37,400 55,400 Current notes receivable (trade) 9,800 7,200 Merchandise inventory 84,940 132,500 Prepaid expenses 5,300 7,800 Plant assets, net 340,000 308,400 _____________________________________… Total assets $ 495,940 $ 545,300 _____________________________________… Liabilities and Equity Current liabilities $68,340 $93,300 Long-term notes payable 81,800 113,000 Common stock, $5 par value 200,000 226,000 Retained earnings 145,800 113,000 _____________________________________… Total liabilities and equity $495,940 $545,300 _____________________________________… Data from the current year’s income statement Sales $790,000 $909,200 Cost of goods sold 588,100 652,500 Interest expense 8,100 12,000 Income tax expense 15,185 25,100 Net income 178,615 219,600 Basic earnings per share 4.47 4.86 Beginning-of-year balance sheet data Accounts receivable, net $31,800 $56,200 Current notes receivable (trade) 0 0 Merchandise inventory 63,600 113,400 Total assets 448,000 362,500 Common stock, $5 par value 200,000 230,000 Retained earnings 105,300 91,600 MY ANSWERS: FIRST ONE: Ryan Company SECOND ONE: Priest Company A. Current ratio 2.3 to 1 ...................... 2.5 to 1 B. Acid-test ratio 1.0 to 1 ......................1.0 to 1 C. Accounts receivable turnover 22.8 times ......................16.3 times D. Inventory turnover 7.9 times .............................5.3 times E. Days' sales in inventory 52.7 days ..................74.1 days F. Days' sales uncollected 17.3 days ....................22.2 days A. Profit margin ratio 22.6% .....................24.2% B. Total asset turnover 1.7 times .....................2.0 times C. Return on total assets 37.8% ....................48.4% D. Return on common stockholders' ezuity 89.3% ..............74.6% E. Price-earnings ratio 1.1..................1.0 F. Dividend yield 0% ..................0%

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