Financial Management The totals from the balance sheet and income statement for
ID: 2590952 • Letter: F
Question
Financial Management
The totals from the balance sheet and income statement for the MAC Company are listed below. Please use these account totals to compute the ratios listed 1 thru 9.
Accounts Payable
31,000.00
Accounts Receivable
52,000.00
Buildings
330,000.00
Accumulated Depreciation
90,400.00
239,600.00
Cash on Hand
37,303.00
Cost of Goods Sold
267,000.00
Current Portion of Long-term Liabilities
13,567.00
EBIT
201,146.00
Equipment
135,000.00
Accumulated Depreciation
48,600.00
86,400.00
Interest
22,010.00
Inventory
41,000.00
Investments 120 day T-bills
165,169.00
Gross Income
625,000.00
Mortgage on Buildings
267,340.00
Net Income
121,275.00
Notes Payable due 300 days
19,000.00
Prepaid Expenses
3,500.00
Sales
892,000.00
Total Operating Expenses
423,854.00
Total Stockholders Equity
294,065.00
1) Current Ratio: _____________________________________
2) Days Sales in Inventory: ______________________________
3) Debt to Equity Ratio___________________________________
4) Accounts Receivable Turnover: ____________________________
5) Profit Margin: ________________________________________
6) Return on Equity: _______________________________________
7) Return on Assets: _______________________________________
8) Retained Earnings: _______________________________________
10) The stock for ABC company is selling at 60 times the earnings price.
What is the significance of the price to earnings ratio.
Accounts Payable
31,000.00
Accounts Receivable
52,000.00
Buildings
330,000.00
Accumulated Depreciation
90,400.00
239,600.00
Cash on Hand
37,303.00
Cost of Goods Sold
267,000.00
Current Portion of Long-term Liabilities
13,567.00
EBIT
201,146.00
Equipment
135,000.00
Accumulated Depreciation
48,600.00
86,400.00
Interest
22,010.00
Inventory
41,000.00
Investments 120 day T-bills
165,169.00
Gross Income
625,000.00
Mortgage on Buildings
267,340.00
Net Income
121,275.00
Notes Payable due 300 days
19,000.00
Prepaid Expenses
3,500.00
Sales
892,000.00
Total Operating Expenses
423,854.00
Total Stockholders Equity
294,065.00
Explanation / Answer
Retained earnings cannot be worked out since he information of common stock outstandingis not provided.
10. Price earnings ratio of 60 times signifies that the market is very positive on the performance of the company.
1 Current ratio Current Assets / Current liabilities 4.70 298,972 / 63,567 2 Days sales in inventory Inventory *365 / Cost of goods sold 56 days 41,000 * 365 / 267,000 3 Debt to equity ratio Total liabilities / Stockholders' equity 1.13 330,907/294,065 4 Accounts receivable turnover Accounts receivable / Sales 17.15 892,000 / 52,000 5 Profit margin Net income / sales 13.60% 121,275 *100 / 892,000 6 Return on equity Net income / Stockholders' equity 41.24% 121,275 / 294,065 7 Return on Assets Net income / Total assets 19.40% 121,275 / 624972Related Questions
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