From the following information, compute the ratios indicated and place the prope
ID: 2454900 • Letter: F
Question
From the following information, compute the ratios indicated and place the proper numbers in the spaces provided. Assume the average for the year is the same as the ending balances for the balance sheet accounts. Round answers to one decimal place, and show your work.
Anders Corporation
Balance Sheet
December 31, 20x5
Assets
Cash
$ 30,000
Marketable securities
20,000
Accounts receivable (net)
40,000
Inventory
60,000
Prepaid expenses
16,000
Property, plant, and equipment
234,000
Total assets
$400,000
Liabilities and Stockholders' Equity
Current liabilities
$ 60,000
Long-term liabilities
100,000
Stockholders' equity
240,000
Total liabilities and stockholders' equity
$400,000
Anders Corporation
Income Statement
For the Year Ended December 31, 20x5
Net sales
$160,000
Cost of goods sold
120,000
Gross margin
$ 40,000
Operating expenses
Selling and administrative expenses
$ 16,000
Interest expense
8,000
Income taxes expense
4,000
28,000
Net income
$ 12,000
Anders had 4,000 shares of common stock issued and outstanding. The market price of common stock at year end was $15.00 per share. Dividends paid in 20x5 were $0.60 per share.
Current ratio
Asset turnover
Quick ratio
Return on assets
Receivable turnover
Return on equity
Days' sales uncollected
Debt to equity ratio
Inventory turnover
Interest coverage ratio
Profit margin
Days' inventory on hand
Dividend yield
Price/earnings (P/E) ratio
Anders Corporation
Balance Sheet
December 31, 20x5
Assets
Cash
$ 30,000
Marketable securities
20,000
Accounts receivable (net)
40,000
Inventory
60,000
Prepaid expenses
16,000
Property, plant, and equipment
234,000
Total assets
$400,000
Liabilities and Stockholders' Equity
Current liabilities
$ 60,000
Long-term liabilities
100,000
Stockholders' equity
240,000
Total liabilities and stockholders' equity
$400,000
Explanation / Answer
Current ratio= Current assets/ current liabilities Current ratio= (30000+20000+40000+60000+16000)/60000 Current ratio= 166000/60000 Current ratio= 2.77 Quick Ratio= (Current Assets-Inventory-Prepaid expenses)/ Current Liabilities Quick Ratio= (166000-60000-16000)/60000 Quick Ratio= 1.5 Receivable turnover= Net Credit sales/Average Account receivable Assumption-assuming all the sales are on credit Receivable turnover= 160000/40000 Receivable turnover= 4 Days' sales uncollected= ( Account Receivable/ Net sales)*365 Days' sales uncollected= ( 40000/ 160000)*365 Days' sales uncollected= 91.25 Inventory turnover= Cost of goods sold/ Average inventory Inventory turnover= 120000/60000 Inventory turnover= 2 Profit Margin ratio= Net Inome/Net sales Profit Margin ratio= 12000/160000 Profit Margin ratio= 0.075 Dividend yield= Dividend per share/ current market price per share Dividend yield= 0.60/15 Dividend yield= 0.04 Asset turnover= Net sales/Average total assets Asset turnover= 160000/400000 Asset turnover= 0.4 Return on assets= Net Income / Average total assets Return on assets= 12000 / 400000 Return on assets= 0.03 Return on equity= Net Income/ average stock holder equity Return on equity= 12000/ 240000 Return on equity= 0.05 Debt to equity ratio= Total liabilities / Total equity Debt to equity ratio= 160000 / 240000 Debt to equity ratio= 0.67 Interest coverage ratio= Earning before interest and taxes/ interest expenses Interest coverage ratio= (12000+8000+4000)/ 8000 Interest coverage ratio= 3 Days' inventory on hand= Number of Days in the Period/Inventory Turnover for the Period Days' inventory on hand= 360/2 Days' inventory on hand= 180 Price/earnings (P/E) ratio= Market price per share/ Earning per share Price/earnings (P/E) ratio= 15/(12000/4000) Price/earnings (P/E) ratio= 5
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