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Compute each of the following: (Round your answers to 2 decimal places.) a. Current ratio b. Earnings per share c. Quick (acid-test) ratio d. Return on investment e. Return on equity f. Debt to equity ratio 3.93 $ 18.59 per share 3.02 % % %

Compute each of the following: (Round your answers to 2 decimal places.) a. Current ratio b. Earnings per share c. Quick (acid-test) ratio d. Return on investment e. Return on equity f. Debt to equity ratio 3.93 $ 18.59 per share 3.02 % % %

FINANCIAL ACCOUNTING
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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Practice work. How do I calculate for d, e, f, please?

**Compute each of the following: (Round your answers to 2 decimal places.)** | a. Current ratio | 3.93 | |----------------------------------|----------------| | b. Earnings per share | $18.59 per share | | c. Quick (acid-test) ratio | 3.02 | | d. Return on investment | % | | e. Return on equity | % | | f. Debt to equity ratio | % | **Explanation:** This table requests calculations for various financial metrics, with some values already provided and others left to be determined as percentages. These are standard financial ratios used to evaluate a company's financial health: - **Current ratio**: A measure of liquidity, showing the company’s ability to cover its short-term obligations. - **Earnings per share (EPS)**: The profit attributed to each share of stock, here noted as $18.59. - **Quick (acid-test) ratio**: A stricter measure of liquidity than the current ratio, excluding inventories. - **Return on investment (ROI)**: The gain or loss generated relative to the investment cost. - **Return on equity (ROE)**: Indicates how well the company is using shareholders' equity to generate profit. - **Debt to equity ratio**: Signals the proportion of company financing that comes from creditors versus shareholders.
Transcribed Image Text:**Compute each of the following: (Round your answers to 2 decimal places.)** | a. Current ratio | 3.93 | |----------------------------------|----------------| | b. Earnings per share | $18.59 per share | | c. Quick (acid-test) ratio | 3.02 | | d. Return on investment | % | | e. Return on equity | % | | f. Debt to equity ratio | % | **Explanation:** This table requests calculations for various financial metrics, with some values already provided and others left to be determined as percentages. These are standard financial ratios used to evaluate a company's financial health: - **Current ratio**: A measure of liquidity, showing the company’s ability to cover its short-term obligations. - **Earnings per share (EPS)**: The profit attributed to each share of stock, here noted as $18.59. - **Quick (acid-test) ratio**: A stricter measure of liquidity than the current ratio, excluding inventories. - **Return on investment (ROI)**: The gain or loss generated relative to the investment cost. - **Return on equity (ROE)**: Indicates how well the company is using shareholders' equity to generate profit. - **Debt to equity ratio**: Signals the proportion of company financing that comes from creditors versus shareholders.
Following is the balance sheet of Rooney Company for Year 3: **ROONEY COMPANY** **Balance Sheet** **Assets** - Cash: $14,750 - Marketable securities: $7,820 - Accounts receivable: $13,460 - Inventory: $10,800 - Property and equipment: $169,000 - Accumulated depreciation: ($12,500) **Total assets:** $203,330 **Liabilities and Stockholders’ Equity** - Accounts payable: $8,330 - Current notes payable: $3,600 - Mortgage payable: $4,700 - Bonds payable: $21,180 - Common stock: $114,600 - Retained earnings: $50,920 **Total liabilities and stockholders’ equity:** $203,330 The average number of common stock shares outstanding during Year 3 was 850 shares. Net income for the year was $15,800.
Transcribed Image Text:Following is the balance sheet of Rooney Company for Year 3: **ROONEY COMPANY** **Balance Sheet** **Assets** - Cash: $14,750 - Marketable securities: $7,820 - Accounts receivable: $13,460 - Inventory: $10,800 - Property and equipment: $169,000 - Accumulated depreciation: ($12,500) **Total assets:** $203,330 **Liabilities and Stockholders’ Equity** - Accounts payable: $8,330 - Current notes payable: $3,600 - Mortgage payable: $4,700 - Bonds payable: $21,180 - Common stock: $114,600 - Retained earnings: $50,920 **Total liabilities and stockholders’ equity:** $203,330 The average number of common stock shares outstanding during Year 3 was 850 shares. Net income for the year was $15,800.
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