Jessica\'s Boutique has cash of $50, accounts receivable of $60, accounts payabl

Question

Jessica's Boutique has cash of $50, accounts receivable of $60, accounts payable of $400, and inventory of $100. What is the value of the quick ratio?

A firm has net working capital of $600, net fixed assets of $2,400, sales of $8,000, and current liabilities of $800. How many dollars worth of sales are generated from every $1 in total assets

Rosita's Restaurant has sales of $5,000, total debt of $1,300, total equity of $2,400, and a profit margin of 6%. What is the return on assets?

Samuelson's has a debt-equity ratio of 40%, sales of $8,000, net income of $600, and total debt of $2,400. What is the return on equity?

What is the quick ratio for 2011?

Explanation / Answer

1 Cash 50 Accounts Receivable 60 Inventory 100 Total Quick Assets 210 Accounts Payable 400 Total Current Liabilities 400 Quick ratio 0.525 (210/400) 2 Net Working Capital 600 (Current Assets- Current Liabilities) Current Liabilities 800 Thus, Current Assets= 600+800 1400 Net Fixed Assets 2400 Total Assets 3800 Sales 8000 Asset turnover ratio 2.105 (Sales/Total Assets) 3 Sales 5000 Profit Margin 6% Profit= 5000*6% 300 Total Debt 1300 Total Equity 2400 Total Liabilities 3700 Hence, Total Assets 3700 Return on Assets (Profit/ Total Assets) 8.108 4 Debt Equity Ratio 40% Sales 8000 Net Income 600 Debt 2400 Equity= 2400/40% 6000 Return on equity= Net Income/Equity 10

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