1.
Introduction:An indicator that specifies the ability of a company to repay its current obligations is termed the
To calculate: Following ratios for K Company and GM Inc.
- Current ratio
- Quick ratio
2.
Introduction:Short term obligations that are paid within a year or operating cycle are termed as current liabilities or in other words it can be referred to as a debt that needs to be repaid within a year.
To calculate: Ratio of
3.
Introduction:Liquidity is a situation in which, the asset of a company can quickly and easilybe converted into cash, i.e., within a short period. Assets that are quickly turned into cash are said to be liquid assets.
To comment: On the liquidity of K Company and GM Inc.
4.
Introduction: Liquidity is a situation in which, the asset of a company can quickly and easilybe converted into cashi.e. within a short period. Assets that are quickly turned into cash are said to be liquid assets.
To specify: Other ratios that help in determining the liquidity of a company.
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Financial Accounting: The Impact on Decision Makers
- Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2, rounding to one decimal place, including percentages, except for per-share amounts: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardMeasures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardComparative financial statement data for Blossom Company and Oriole Company, two competitors, appear below. All balance sheet data are as of December 31, 2022. Net sales. Cost of goods sold Operating expenses Interest expense Income tax expense Current assets Plant assets (net) Current liabilities Long-term liabilities Net cash common by operating activities Capital expenditures Dividends paid on common stock Weighted-average common shares outstanding Blossom Company Oriole Company 2022 Net Income $2,592,000 1,692,000 407,520 9,980 $ 122,500 496,600 766,000 95,500 157,020 198,720 129,600 51,840 80,000 2022 $892,800 489,600 141,120 4,240 51,840 213,840 201,160 (a) Compute the net income and earnings per share for each company for 2022. (Round Earnings per share to 2 decimal places, eg $2.78) Earnings per share 48,600 58,470 51,840 28,800 21,600 50,000arrow_forward
- Below are the Income Statement and Balance Sheet for Palmer Corporation for the years ended 2020 and 2021. Calculate the liquidity ratios in the table to the right for the year ended 2021. Palmer Corporation Comparative Income Statement For the Years Ended December 31, 2021 and 2020 2021 2020 Amount Amount Sales $5,750,900 $4,894,800 Cost of goods sold 3,646,700 3,195,600 Gross profit 2,104,200 1,699,200 Selling expenses 775,500 688,700 Administrative expenses 863,900 815,200 Total operating expenses 1,639,400 1,503,900 Income from operations 464,800 195,300 Other income 102,500 84,600 Income before income tax 567,300 279,900 Income tax expense 200,600 101,200 Net income $366,700 $178,700 Palmer Corporation…arrow_forwardBelow are the Income Statement and Balance Sheet for Palmer Corporation for the years ended 2020 and 2021. Calculate the liquidity ratios in the table to the right for the year ended 2021. Palmer Corporation Comparative Income Statement For the Years Ended December 31, 2021 and 2020 2021 2020 Amount Amount Sales $5,750,900 $4,894,800 Cost of goods sold 3,646,700 3,195,600 Gross profit 2,104,200 1,699,200 Selling expenses 775,500 688,700 Administrative expenses 863,900 815,200 Total operating expenses 1,639,400 1,503,900 Income from operations 464,800 195,300 Other income 102,500 84,600 Income before income tax 567,300 279,900 Income tax expense 200,600 101,200 Net income $366,700 $178,700 Palmer Corporation…arrow_forwardHCB, Inc.'s financial partial statements are shown below. HCB Income Statement 2021 Sales 2,000.0 Assets 2021 Cash 86.0 Accounts receivable 360.0 Inventory 320.0 Short-term investments 223.0 Total current assets 989.0 Net fixed assets 1,940.0 Total assets 2,929.0 Liabilities and equity 2021 Accounts payable 200.0 Accruals 240.0 Short-term debt 292.9 Total current liabilities 732.9 Long-term debt 1,757.4 Total liabilities 2,490.3 Par + paid in capital less treasury 238.7 Retained earnings 200.0…arrow_forward
- Selected information from the comparative financial statements of AppleVerse Company for the year ended December 31 appears below: 2018 2017 Php Php Accounts receivable (net) 175,000 200,000 Inventory 130,000 150,000 Total assets 1,100,000 800,000 Current liabilities 140,000 110,000 Long-term debt 410,000 300,000 Net credit sales 800,000 700,000 Cost of goods sold 600,000 530.000 Interest expense 40.000 25,000 Income tax expense 60.000 29,000 Net income 150.000 85,000 Net cash provided by operating 220,000 135,000 activities Compute for the Receivables Turnover for 2018. O 2.13 O 4.27 O 5.95 O 3.23arrow_forwardAnalysis and Interpretation of Liquidity and SolvencyBalance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) September 2, 2018 Total revenue $141,576 Operating expenses Merchandise costs 123,152 Selling, general and administrative 13,876 Preopening expenses 68 Operating Income 4,480 Other income (expense) Interest expense 159 Interest income and other, net (121) Income before income taxes 4,442 Provision for income taxes 1,263 Net income including noncontrolling interests 3,179 Net income attributable to noncontrolling interests (45) Net income attributable to Costco $3,134 Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) September 2, 2018 September 3, 2017 Current assets Cash and cash equivalents $6,055 $4,546 Short-term investments 1,204 1,233…arrow_forwardThe 2024 Income statement of Adrian Express reports sales of $18,957,000, cost of goods sold of $11,971,500, and net Income of $1,690,000. Balance sheet Information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets Liabilities and stockholders' Equity Current liabilities Long-term debt Common stock Retained earnings Total liabilities and stockholders' equity Industry averages for the following four ratios are as follows: 25 days 60 days 2 to 1 35% ADRIAN EXPRESS Balance Sheets December 31, 2024 and 2023 Req 1 Req 2 and 3 Complete this question by entering your answers in the tabs below. Ratios 2024 Average collection period Average days in inventory Current ratio Debt to equity ratio $ 690,000 1,580,000 1,980,000 4,890,000 $ 9,140,000 Average collection period Average days in inventory Current ratio Debt to equity ratio Required: 1. Calculate the four ratios listed above for Adrian Express In 2024 assuming all…arrow_forward
- Current Assets Cash A/R Inventory Total Net Plant & Equip Total Assets Tomson Corporation 2013 and 2014 Statement of Financial Position Assets 2013 $ 8,436 21,530 38.760 $ 68,726 $ 226.706 $295,432 2014 $ 10,157 23,406 42.650 $ 76,213 Current Liabilities A/P Notes Payable Total 1. The current ratio for each year 2. The quick ratio for each year Long-term Debt Owner's Equity Common Stock & Paid-in Surplus Retained Earnings $248,306 Total Total Liabilities & $324,519 Owners Equity Liabilities 3. The cash ratio for each year 4. The NWC to total assets ratio for each year 2013 5. The debt-equity ratio and the equity multiplier for each year 6. The total debt ratio and the long-term debt ratio for each year Round all answers to 2 decimal places. $ 43,050 18.384 $61.434 $ 25.000 $ 40,000 168.998 $ 208,998 $ 295,432 2014 1. Prepare: The 2014 combined common-size, common-base year statement of financial position for Tomson. Round your intermediate calculations to 2 decimal places…arrow_forwardComparative financial statement data for Culver Corporation and Flint Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2022. Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Current assets Plant assets (net) Current liabilities Long-term liabilities Net cash common by operating activities Capital expenditures Dividends paid on common stock Weighted-average common shares outstanding Culver Corporation 2022 $2,412,000 1.574,500 379,220 9,080 114,000 488,950 710,050 88,900 138,910 184,920 120,600 48,240 80,000 Flint Corporation 2022 $830,800 455,600 131,320 3,140 48,240 198,880 185,020 45,200 31.580 48,240 26,800 20,100 50,000arrow_forwards The 2021 income statement of Adrian Express reports sales of $22,110,000, cost of goods sold of $12,950,000, and net income of $2,260,000. Balance sheet information is provided in the following table. Assets Current assets: Cash Accounts receivable Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity Gross profit ratio Return on assets ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Profit margin Asset turnover Return on equity Profitability Ratios Industry averages for the following profitability ratios are as follows: Gross profit ratio Mes % $ 45% 25% 15% 15.5 times. 35% 2021 2020 980,000 1,950,000 2,490,000 5,180,000 4,480,000 $10,600,000 $8,640,000 $1,000,000 1,310,000 1,850,000 Required: 1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal place.) $ 2,228,000 $1,928,000…arrow_forward
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