Use the following selected data from Business Solutions\'s income statement for

Question

Use the following selected data from Business Solutions's income statement for the three months ended March 31, 2016, and from its March 31, 2016, balance sheet to complete the requirements below: computer services revenue, $28,304; net sales (of goods), $18,600; total sales and revenue, $46,904; cost of goods sold, $12,834; net income, $20,745; quick assets, $89,728; current assets, $96,22 current liabilities, $890; total liabilities, $890; and total equity, $121,126 4 total assets, $122,016 Required .Compute the gross margin ratio (both with and without services revenue) and net profit margin ratio. Round your percentage answers to 1 decimal place.) With Service Revenue Without Service Revenue Gross margin ratio 68.11% Net profit margin ratio 2. Compute the current ratio and acid-test ratio. (Round your answers to 1 decimal place.) Current ratio Acid-test ratio 3. Compute the debt ratio and equity ratio. (Round your percentage answers to 1 decimal place.) Debt ratio Equity ratio 4. What percent of its assets are current? What percent are long term? (Round your answers to the nearest whole percentage.) Current assets Long-term assets

Explanation / Answer

Answer 1 Gross Margin ratio = Gross Margin / Total Sales & Revenue Gross Margin = Total Sales & revenue - Cost of goods sold With Service Revenue Without service revenue Net sales (of goods) 18600 Total sales & revenue 46904 Total sales & revenue 46904 18600 Less : Cost of goods sold 12834 12834 Gross Margin 34070 5766 / Total Sales & Revenue 46904 18600 Gross Margin ratio 72.6% 31.0% Net profit margin ratio = Net Income / Total sales & revenue Net profit margin ratio = $20745 / $46904 = 44.2% Answer 2 Current ratio = Current assets / Current liabilities = $96,224 / $890 = 108.1 Acid test ratio = Quick assets / Current liabilities = $89,728 / $890 = 100.8 Answer 3 Debt ratio = Total debt / Total assets = $890 / $122016 = 0.7% Equity ratio = Total equity / Total assets = $121126 / $122016 = 99.3% Answer 4 Current assets % = Current assets / Total assets = $96224 / $122016 = 79% Long term assets % = Long term assets / Total assets = [$122016-$96224]/$122016 = 21%

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