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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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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