Note: The common shares are trading in the stock market for $15 per share (Pleas
ID: 2448565 • Letter: N
Question
Note: The common shares are trading in the stock market for $15 per share
(Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)
Calculate the following:
The firm's inventory turnover ratio
The firm's debt-to-equity ratio for 2012
The firm's total asset turnover for 2012
The firm's return on equity ratio for 2012
please do it step by step so i can learn it, thanks in advance
Explanation / Answer
Inventory Turnover Ratio = Sales/ inventory Sales 9300000 Inventory (530000+460000)/2 495000 Inventory Turnover Ratio 9300000/495000 18.79 Debt to Equity Ratio = Total Liabilities/ Total Shareholders Equity Total Liability 3200000+2500000 5700000 Total Shareholders Equity 900000+800000 1700000 Debt to Equity Ratio = 5700000/1700000 3.4 Total Asset Turnover = Net Sales/ Average total asset Net Sale 9300000 Average Total Asset 3200000+2500000 5700000 Total Asset Turnover = 1.63 Return on Equity = Net Income/ Shareholder's equity Net Income 225000 Shareholder's equity 900000+800000 1700000 Return on Equity = 0.13
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