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A22-13 Compute and Summarize Significance of Ratios (LO 22-3, 22-4, 22-5, 22-6) Fader Corp's 20X4 and 20x5 SFP and 20x5 SCI are as follows (in millions of dollars, except per share amounts): Condensed Statement of Financial Position 31 December ASSETS Cash Investments (short-term) Accounts receivable (net of allowance) Inventory (FIPO) Prepaid expenses Investments, long-term Property, plant, and equipment (net of accumulated depreciation of $29 (20x4), 537 (20X5) Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Accrued liabilities Notes payable, long-term Common shares, no par (60,000 shares outstanding) Retained earnings (including 20x4 and 20x5 income) Totals Statement of Comprehensive Income, 20x5 Sales revenue (1/3 were credit sales) Investment revenue Cost of goods sold Distribution expense Administrative expense (includes 58 of depreciation) Interest expense Income tax expense (the tax rate rate is 40%) Net income and comprehensive income Additional information: Cash flow from operations a. Profitability (after tax only) b. Efficiency 20x5 20x4 $ 11 5 20 34 c. Solvency d. Liquidity 23 31 31 19 37 22 2 31 21 72 $104 $186 10 2 41 45 76 76 43 53 $184 $186 $153 4 (70) (20) (15) (4) (20) $ 28 Required: Compute the 20x5 ratios that measure: (Use 365 days in a year. Do not round your intermediate calculations. Round your final percentage answers to nearest whole number L.e. 0.12 should be considered as 12%. Round "Quick ratio" and "Asset turnover" to 2 decimal places, "Current Ratio", "Times-interest-earned", "Average collection period" & "Defensive interval" to nearest whole number and all other answers to 1 decimal place.) $ 22

A22-13 Compute and Summarize Significance of Ratios (LO 22-3, 22-4, 22-5, 22-6) Fader Corp's 20X4 and 20x5 SFP and 20x5 SCI are as follows (in millions of dollars, except per share amounts): Condensed Statement of Financial Position 31 December ASSETS Cash Investments (short-term) Accounts receivable (net of allowance) Inventory (FIPO) Prepaid expenses Investments, long-term Property, plant, and equipment (net of accumulated depreciation of $29 (20x4), 537 (20X5) Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Accrued liabilities Notes payable, long-term Common shares, no par (60,000 shares outstanding) Retained earnings (including 20x4 and 20x5 income) Totals Statement of Comprehensive Income, 20x5 Sales revenue (1/3 were credit sales) Investment revenue Cost of goods sold Distribution expense Administrative expense (includes 58 of depreciation) Interest expense Income tax expense (the tax rate rate is 40%) Net income and comprehensive income Additional information: Cash flow from operations a. Profitability (after tax only) b. Efficiency 20x5 20x4 $ 11 5 20 34 c. Solvency d. Liquidity 23 31 31 19 37 22 2 31 21 72 $104 $186 10 2 41 45 76 76 43 53 $184 $186 $153 4 (70) (20) (15) (4) (20) $ 28 Required: Compute the 20x5 ratios that measure: (Use 365 days in a year. Do not round your intermediate calculations. Round your final percentage answers to nearest whole number L.e. 0.12 should be considered as 12%. Round "Quick ratio" and "Asset turnover" to 2 decimal places, "Current Ratio", "Times-interest-earned", "Average collection period" & "Defensive interval" to nearest whole number and all other answers to 1 decimal place.) $ 22

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4PB
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A22-13 Compute and Summarize Significance of Ratios (LO 22-3, 22-4, 22-5, 22-6) Fader Corp's 20X4 and 20X5 SFP and 20x5 SCI are as follows (in millions of dollars, except per share amounts): Condensed Statement of Financial Position 31 December ASSETS Cash Investments (short-term) Accounts receivable (net of allowance) Inventory (FIPO) Prepaid expenses Investments, long-term i Property, plant, and equipment (net of accumulated depreciation of $29 (20x4), 537 (20x5) Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Accrued liabilities Notes payable, long-term Common shares, no par (60,000 shares outstanding) Retained earnings (including 20x4 and 20x5 income) Totals Statement of Comprehensive Income, 20x5 Sales revenue (1/3 were credit sales) Investment revenue Cost of goods sold Distribution expense Administrative expense (includes 58 of depreciation) Interest expense Income tax expense (the tax rate is 40%) Net income and comprehensive income Additional information: Cash flow from operations 20x5 20x4 $ 11 5 20 34 a. Profitability (after tax only) b. Efficiency c. Solvency d. Liquidity 23 31 31 31 $184 $186 Answer is complete but not entirely correct. 19 37 22 2 41 76 43 10 2 45 76 53 $184 $186 $153 4 (70) (20) (15) (4) (20) $ 28 Required: Compute the 20x5 ratios that measure: (Use 365 days in a year. Do not round your intermediate calculations. Round your final percentage answers to nearest whole number Le. 0.12 should be considered as 12%. Round "Quick ratio" and "Asset turnover" to 2 decimal places, "Current Ratio", "Times-interest-earned", "Average collection period" & "Defensive interval" to nearest whole number and all other answers to 1 decimal place.) $ 22
Transcribed Image Text:A22-13 Compute and Summarize Significance of Ratios (LO 22-3, 22-4, 22-5, 22-6) Fader Corp's 20X4 and 20X5 SFP and 20x5 SCI are as follows (in millions of dollars, except per share amounts): Condensed Statement of Financial Position 31 December ASSETS Cash Investments (short-term) Accounts receivable (net of allowance) Inventory (FIPO) Prepaid expenses Investments, long-term i Property, plant, and equipment (net of accumulated depreciation of $29 (20x4), 537 (20x5) Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable Accrued liabilities Notes payable, long-term Common shares, no par (60,000 shares outstanding) Retained earnings (including 20x4 and 20x5 income) Totals Statement of Comprehensive Income, 20x5 Sales revenue (1/3 were credit sales) Investment revenue Cost of goods sold Distribution expense Administrative expense (includes 58 of depreciation) Interest expense Income tax expense (the tax rate is 40%) Net income and comprehensive income Additional information: Cash flow from operations 20x5 20x4 $ 11 5 20 34 a. Profitability (after tax only) b. Efficiency c. Solvency d. Liquidity 23 31 31 31 $184 $186 Answer is complete but not entirely correct. 19 37 22 2 41 76 43 10 2 45 76 53 $184 $186 $153 4 (70) (20) (15) (4) (20) $ 28 Required: Compute the 20x5 ratios that measure: (Use 365 days in a year. Do not round your intermediate calculations. Round your final percentage answers to nearest whole number Le. 0.12 should be considered as 12%. Round "Quick ratio" and "Asset turnover" to 2 decimal places, "Current Ratio", "Times-interest-earned", "Average collection period" & "Defensive interval" to nearest whole number and all other answers to 1 decimal place.) $ 22
Required: Compute the 20x5 ratios that measure: (Use 365 days in a year. Do not round your intermediate calculations. Round your final percentage answers to nearest whole number i.e. 0.12 should be considered as 12%. Round "Quick ratio" and "Asset turnover" to 2 decimal places, "Current Ratio", "Times-interest-earned", "Average collection period" & "Defensive interval" to nearest whole number and all other answers to 1 decimal place.) a. Profitability (after tax only) b. Efficiency c. Solvency d. Liquidity a b. C. d Answer is complete but not entirely correct. Ratios that measure profitability Return on long-term capital (after tax) Retum on assets (after tax) Return on common owners' equity Operating margin (before tax) Return on gross assets (before tax) Ratios that measure efficiency Asset turnover Accounts receivable turnover Average collection period of accounts receivable Inventory tumover Ratios that measure solvency: Debt equity Long-term debt capitalization Debt capital employed Debt total assets Times-interest-camed Times-debt-service-eamed Ratios that measure liquidity Current ratio Quick ratio Defensive interval 18 % 16% 23 % 33% 28% 0.85 times 24 times 150 days 2.1 times 55 % 26% 340% 35 % 130 11.50 30 1,54 150 days
Transcribed Image Text:Required: Compute the 20x5 ratios that measure: (Use 365 days in a year. Do not round your intermediate calculations. Round your final percentage answers to nearest whole number i.e. 0.12 should be considered as 12%. Round "Quick ratio" and "Asset turnover" to 2 decimal places, "Current Ratio", "Times-interest-earned", "Average collection period" & "Defensive interval" to nearest whole number and all other answers to 1 decimal place.) a. Profitability (after tax only) b. Efficiency c. Solvency d. Liquidity a b. C. d Answer is complete but not entirely correct. Ratios that measure profitability Return on long-term capital (after tax) Retum on assets (after tax) Return on common owners' equity Operating margin (before tax) Return on gross assets (before tax) Ratios that measure efficiency Asset turnover Accounts receivable turnover Average collection period of accounts receivable Inventory tumover Ratios that measure solvency: Debt equity Long-term debt capitalization Debt capital employed Debt total assets Times-interest-camed Times-debt-service-eamed Ratios that measure liquidity Current ratio Quick ratio Defensive interval 18 % 16% 23 % 33% 28% 0.85 times 24 times 150 days 2.1 times 55 % 26% 340% 35 % 130 11.50 30 1,54 150 days
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