FLOUNDER COMPANY BALANCE SHEET DECEMBER 31, 2017 Flounder Company has been opera

Question

FLOUNDER COMPANY
BALANCE SHEET
DECEMBER 31, 2017

Flounder Company has been operating for several years, and on December 31, 2017, presented the following balance sheet.

FLOUNDER COMPANY
BALANCE SHEET
DECEMBER 31, 2017

Cash $36,000 Accounts payable $87,300 Receivables 75,900 Mortgage payable 144,700 Inventory 88,400 Common stock ($1 par) 136,900 Plant assets (net) 202,900 Retained earnings 34,300 $403,200 $403,200
The net income for 2017 was $26,700. Assume that total assets are the same in 2016 and 2017.

Compute each of the following ratios. (Round answers to 2 decimal places, e.g. 1.59 or 45.87%.)
(a) Current ratio

(b) Acid-test ratio

(c) Debt to assets ratio

% (d) Return on assets

%

Explanation / Answer

a) Current ratio = (36000+75900+88400)/87300 = 2.29

b) Acid test ratio = (36000+75900)/87300 = 1.28

c) Debt to assets ratio = (87300+144700)*100/403200 = 57.54%

d) Return on assets = 26700*100/403200 = 6.62%

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