Homework Answers
2018:
Current ratio = Current assets / Current liabilities
Current ratio = 7,000,000 / 3,000,000
Current ratio = 2.3
Debt to asset ratio = Debt / Total assets
Debt to asset ratio = 4,000,000 / 15,000,000
Debt to asset ratio = 0.26 or 26.6%
This means 26.6% of company's assets are funded via debt. This means the company is low on risk
2019:
Current ratio = 9,000,000 / 1,000,000
Current ratio = 9
Debt to asset ratio = 4,000,000 / 15,000,000
Debt to asset ratio = 0.266 or 26.6%
B)
While the current ratio has increased very much, debt to asset ratio has remained unchanged.
Current ratio is the potential ability of companies to pay off their debt and represents liquidity position of the company
In the given case, since current ratio increased from 2018 to 2019, it means the company experienced an increase in its liquidity over the year.
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e) Return on equity
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1) Based on the balance sheet and income statement information
given below, calculate the following financial ratios and explain
briefly what the number you calculated means:
a) Current ratio
b) Acid-test ratio
c) Days in receivables
d) Debt ratio
e) Return on equity
Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Less: accum. depr. Net fixed assets Total assets $600,000 900,000 1,500,000 75,000 $3,075,000 8,000,000 (2,075,000) $5,925,000 $9,000,000 Liabilities: Accounts payable Notes payable...
1) Based on the balance sheet and income statement information
given below, calculate the following financial ratios and explain
briefly what the number you calculated means:
a) Current ratio
b) Acid-test ratio
c) Days in receivables
d) Debt ratio
e) Return on equity
Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Less: accum. depr. Net fixed assets Total assets $600,000 900,000 1,500,000 75,000 $3,075,000 8,000,000 (2,075,000) $5,925,000 $9,000,000 Liabilities: Accounts payable Notes payable...
Bethesda Mining Company reports the following balance sheet Information for 2018 and 2019. 2018 2019 Assets Current assets Cash Accounts receivable BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 Llabilities and Owners' Equity Current liabilities $ 31,982 $ 41,399 Accounts payable 58,781 79,139 Notes payable $ 193,422 $ 201,111 88,520 140,088 Inventory 131,971 198,632 Total $ 281,942 $ 341,199 Total $222,734 $319,170 $244.000 $ 180,750 Long-term debt Owners' equity Common stock and pald-In surplus...
Calculate the ratio of the following:
Marnus Inc Income Statement For the Financial Year ended 12/31/19 $150,000,000 ($130,000,000) $20,000,000 12/31/18 $140,000,000 ($123,000,000) $17,000,000 $9,000,000 $10,000,000 Statement values in 000's Period Ending: Total Revenue (Net Revenue) Cost of Revenue (COGS) Gross Profit Operating Expenses Sales, General and Admin. Other Operating Items Total Operating Exp Operating Income (or loss) Interest Expense Earnings Before Tax Income Tax Net Income (or loss) $0 $0 | ($9,000,000) $11,000,000 ($1,000,000) $10,000,000 ($5,000,000) $5,000,000 ($10,000,000) $7,000,000 ($800,000)...
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