Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Using the information below, what is Puppy Company's current ratio for 2019?
The following financial statement accounts and balances are for Puppy Company:
2019
82,370
6,555
327,750
4,288
420,963
290,750
711,713
111,450
45,000
156,450
555,263
2018
Cash
Accounts Receivable
Total Inventory
Prepaid Expenses
Total Current Assets
Property and Equipment
Total Assets
Total Current Liabilities
Total Debt
Total Liabilities
Total Shareholders'
Equity
Sales / Net Revenue /
Net
Credit Sales
COGS (Cost of Goods
Sold)
Gross Profit
71,740
5,963
364,680
5,382
447,765
250,612
698,377
128,857
50,512
179,369
519,008
2,250,000
2,064,676
1,370,500
1,299,092
765,584
Net Income / Profit
879,500
207,850
250,094
Here are some formulas that you may find helpful:
item
Formula
Desired Result
Current Ratio
Quick Ratio (Acid-test)
|Current assets / Current liabilities
Cash+ short-term investments + AR /
Current liabilities
Sales /
Average gross accounts receivable
Higher
Higher
Receivables turnover
Higher
Transcribed Image Text:1,370,500
COGS (Cost of Goods
Sold)
Gross Profit
1,299,092
765,584
Net Income / Profit
879,500
207,850
250,094
Here are some formulas that you may find helpful:
Item
Formula
Desired Result
Current assets/ Current liabilities
|Cash+ short-term investments + AR /
Current liabilities
Sales /
Average gross accounts receivable
|Days in year / Receivables turnover
|Cost of goods sold / Average inventory
Days in year / Inventory turnover
Total liabilities / Total assets
Total liabilities /
Owner's (Shareholders') Equity
Current Ratio
Quick Ratio (Acid-test)
|Higher
Higher
Receivables turnover
Higher
Collection Period
Inventory turnover
Days sales in inventory
Debt to Total Assets
Debt to Equity
Lower
Higher
Lower
Lower
Lower
Gross Margin (%) (Gross Gross Profit /Total revenue
Profit Margin)
Profit Margin (%)
(Net Margin)
Asset turnover
Return on Assets
Higher
Net profit / Total revenue
Higher
Net sales / Average total assets
Net profit / average total assets
Profit / Average shareholders' equity
Higher
Higher
Higher
Return on Equity (ROE)
Formulas
3.8%
38%
2.7:1
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