Selected year-end financial statements of ABC Corporation follow. (All sales wer

Question

Selected year-end financial statements of ABC Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2014, were inventory, $53,900; total assets, $209,400; common stock, $90,000; and retained earnings, $40,165.)

Calculate:

-Time Interest Earned

-Return on Total Assets

-Day's Sales in Inventory

-Total Asset Turnover

-Return on Common Stockholders Equity

-Acid-Test Ratio

-Debt to Equity Ratio

Selected year-end financial statements of ABC Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31, 2014, were inventory, $53,900; total assets, $209,400; common stock, $90,000; and retained earnings, $40,165.)

Explanation / Answer

Time Interest earned ratio = EBIT / Interest expense

=47480/5000= 9.49

Return on Total Assets = Net income . Average total assets * 100

=28335/(209400+250500)/2)* =12.32%

Day's Sales in Inventory = ending inventory /cogs*100

34,150 /294650*100 =11.59

Total Asset Turnover=net sales/ averagw total assets =(448600/(209400+250000/2))=1.34

Return on Common Stockholders Equity=net income/shareholders equity

=28335/90000 =0.31

Debt to Equity Ratio = debt / equity =66400/90000 -=.73

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