Please help me answer the below questions based on the following Table. Table 4-

Question

Please help me answer the below questions based on the following Table.

Table 4-2 Drummond Company Balance Sheet ssets ash and marketable securities ccounts receivable $400,00 1,415,000 1,847,50 nventories Prepaid expenses 24,000 otal current assets 3,686,500 Fixed assets 2,800,000 Less: accum. depr (1,087,500 Net fixed assets otal assets $5,399,000 abilities ccounts payable $600,00 875,000 92,000 $1,567,000 900,00 700,00 2,232,00 $5,399,000 Notes payable ued taxes otal current liabilities Long-term debt ommon Stock (100,000 shares) Retained Earnings otal liabilities and owners equity

Explanation / Answer

Question 3

Acid test ratio = Cash + Marketable securities / Current liabilities = 1815000 / 1567000 = 1.17

Option A)

Question 4

Inventory turnover ratio= COGS/ Average inventory = 4375000 / 1847500 = 2.37

Option B)

Question 5

Market Price = 50

Earning per share = Net earnings / no of shares = 459000 / 100000 = 4.59

P/E ratio = Market price / Earning per share = 50 / 4.59 = 10.89

Option A)

Question 6

Return on equity = Net income / Shareholders equity = 459000 / (700000 + 2232000) = 15.65

Option D)

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