Use the following data to calculate the requested ratios: a. Current ratio b. Da

Question

Use the following data to calculate the requested ratios:

a. Current ratio

b. Days accounts receivable

c. Inventory turnover

d. Days accounts payable outstanding

e. Debt to equity

f. Times interest earned

g. ROE

h. Total asset turnover (asset utilization)

Liabilities and Equity Income Statement Assets Cash Accounts receivable 700 Accrued expenses Inventory* 80 Accounts payable 400 Net sales 9,125 6,100 500 Notes payable450 Operating expenses 2,550 80 COGS bank 1,280 CM LTD 1,220 Current liabilities 980 Other income 101 Current assets Fixed assets 50 Interest expense 550 Other expenses 970 Taxe 48 112 216 LTD Total Assets 2,500 Equity Total Liabilities ,500 and Equity Net income

Explanation / Answer

a) Current ratio = Current assets/Current liabilities = 1280/980 = 1.31 b) Days accounts receivable = Accounts receivable*365/Net Sales = 700*365/9125 = 28 days c) Inventory turnover = Inventory*365/COGS = 500*365/6100 = 30 days d) Days accounts payable outstanding = Accounts payable*365/COGS = 400*365/6100 = 24 days e) Debt to equity = Total debt/Total equity = (980+550)/970 = 1.58 f) Times interest earned = Operating profit/Interest expense = 475/101 = 4.70 g) ROE = Net income/Equity = 216/970 = 22.27% h) Total asset turnover = Net sales/Total assets = 9125/2500 = 3.65

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.