1.9. (Ratio analysis) The financial statements and industry norms are shown below for the Congo Mining Company: ...... d. How is the firm financing its assets? e. Are its managers generating a good return on equity? INDUSTRY NORM Current ratio 5.10 Acid-test (quick) ratio 3.20 Inventory turnover Average collection period Debt ratio Times interest earned 2.40 88.00 0.35 7.15 Total asset turnover 0.78 Fixed-asset turnover 1.10 Operating profit margin 23% Return on common equity 11% The Congo Mining Company Balance Sheet at 12/31/2017 and 12/31/2018 Assets 2017 2018 Cash $ 220 $ 170 430 415 Accounts receivable Inventory 655 570 $1,220 $1,240 Current assets $2,300 $2.700 Plant and equipment Less accumulated depreciation (1.300) $1.400 (1.000) $1.300 Net plant and equipment $2.520 $2.640 Total assets Liabilities and Owners' Equity $ 220 $ 170 Accounts payable Notes payable-current (9%) Current liabilities 170 $ 340 $ 220 700 700 Bands (8.65% interest) Total debt $1.040 $ 920 $ 350 $ 350 Owners equity Common stock 600 600 Paid-in capital 650 $1.600 650 Retained earnings $1.600 Total owners' equity $2.640 $2.520 Total liabilities and owners' eguity

1.9. (Ratio analysis) The financial statements and industry norms are shown below for the Congo Mining Company: ...... d. How is the firm financing its assets? e. Are its managers generating a good return on equity? INDUSTRY NORM Current ratio 5.10 Acid-test (quick) ratio 3.20 Inventory turnover Average collection period Debt ratio Times interest earned 2.40 88.00 0.35 7.15 Total asset turnover 0.78 Fixed-asset turnover 1.10 Operating profit margin 23% Return on common equity 11% The Congo Mining Company Balance Sheet at 12/31/2017 and 12/31/2018 Assets 2017 2018 Cash $ 220 $ 170 430 415 Accounts receivable Inventory 655 570 $1,220 $1,240 Current assets $2,300 $2.700 Plant and equipment Less accumulated depreciation (1.300) $1.400 (1.000) $1.300 Net plant and equipment $2.520 $2.640 Total assets Liabilities and Owners' Equity $ 220 $ 170 Accounts payable Notes payable-current (9%) Current liabilities 170 $ 340 $ 220 700 700 Bands (8.65% interest) Total debt $1.040 $ 920 $ 350 $ 350 Owners equity Common stock 600 600 Paid-in capital 650 $1.600 650 Retained earnings $1.600 Total owners' equity $2.640 $2.520 Total liabilities and owners' eguity

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Choose the correct letter of answer and provide a solution. Thanks The financial ratios of a firm are as follows: Current Ratio=1.33; Acid-test ratio=0.80; Current liabilities=P40,000.00; Inventory turnover ratio=6 times. What is the sales/cost of good sold of the firm? *a. P57,200.00b. P77,200.00c. P97,20000d. P117,200.00e. P127,200.00
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Kk.163.
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