Weygandt, Managerial Accounting, 7e Assignment ntGradebook ORION Downloadable eT

Question

Weygandt, Managerial Accounting, 7e Assignment ntGradebook ORION Downloadable eTextbook Problem 14-6A The comparative statements of Corbin Company are presented below. CORBIN COMPANY Income Statement For the Years Ended December 31 2017 2016 Net sales (all on account) Expenses $600,800 $519,600 Cost of goods sold Selling and administrative Interest expense Income tax expense 415,200 120,800 8,400 18,100 562,500 s 38,300 353,000 113,900 6,000 14,100 487,000 S 32,600 Total expenses Net income CORBIN COMPANY Balance Sheets December 31 Assets 2017 2016 Current assets Cas s 21.400 s 18.800 Short-term investments

Explanation / Answer

a) Current ratio= current asset/current liability

=216,300/145,800

= 1.48:1

b) Acid test ratio = Current Assets - Inventory / Current liability
= (216300 - 90000) / 145800
= 0.866 : 1

c) Accounts receivable turnover = Sales / average Accounts receivable
= 600800 / [(86600+74000)/2]
= 7.48 : 1

d) Inventory turnover = COGS / Average inventory
= 600800 / [(90000 + 70900)/2]
= 7.47 : 1

e) Profit margin = Net profit / Sales
= 38300 / 600800 * 100
= 6.37 %

f) Asset turnover = Sales / Average assets
= 600800/ [( 639500+ 561400)/2]
= 1

g) Return on Assets = Net profit / Assets
= 38300 / 639500 * 100
=5.9 %

h) Return on common stockholders equity = Net profit/common stockholder equity
= 38300 / 146400
= 26.16%

i) Earnings per share = Earnings available for equity share holder/ no. of share outstanding
= 38300 / 29280

= 1.31

j) Price earnings ratio = 19.15/1.31

= 14.62

l) Debt to assets ratio = 120000 / 639500
= 0.18:1

m) times interest earned = EBIT / Interest expense

= 64800/8400

= 7.71:1

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