Sales revenue 800,000 600,000 Total expenses 400,000 200,000 Cash 90,000 25,000

Question

Sales revenue
800,000
600,000
Total expenses
400,000
200,000
Cash
90,000
25,000
Accounts receivable
120,000
75,000
Property plant and equipment, net
250,000
225,000
Accounts payable
95,000
60,000
Salaries payable
75,000
35,000
Long term liabilities
150,000
75,000
Common shares outstanding, beginning of year
50,000
25,000
Common shares outstanding, end of year
100,000
40,000
No dividends were paid during 2008.
Compute the following for both companies:
1. Working capital
2. Current ratio
3. Debt to assets ratio
4 Earnings per share
5. Which company appears more liquid? (Name a ratio used to determine)
6. Which company appears more solvent? (Name a ratio used to determine.)

Explanation / Answer

Here is your question! Here's my answer:

1. Working capital
Cash
90,000 25,000
AR
120,000 75,000
Total current assets
210,000 100,000
AP
95,000 60,000
Salaries payable
75,000 35,000
Total current liabilities
170,000 95,000
Working capital (CA - CL)
40,000 5,000
2. Current ratio
CA
210,000 100,000
CL
170,000 95,000
CA / CL
1.24 1.05
Expressed as a proportion
1.24:1 1.05:1
3. Debt to assets ratio
CA
210,000 100,000
LTA
250,000 225,000
Total assets
460,000 325,000
CL
170,000 - 95,000
LTL
150,000 75,000
Total liabiltiies
320,000 170,000
Total liabilities / total assets
69.6% 52.3%
4 Earnings per share
Revenues
800,000 600,000
Expenses
400,000 200,000
Net income
400,000 400,000
Average common stock
75,000 32,500
(beginning shares + ending shares) divided by 2)
EPS
5.33 12.31
The rest I don't want to answer. I already answered more than it is allowed here

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