Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 - $860,000 ► Current ratio $3.095.000 + $860,000 - v Quick ratio $1,866,000 + $860,000 - V Accounts receivable turnover $8,260,000 + [($714,000 + $740,000) + 21- Number of days' sales in receivables [($714,000 + $740,000) + 21 + ($8,260,000 + 365) - Inventory turnover $4,100,000 + [($1,072.000 + $1,100,000) + 21 - Number of days' sales in inventory [($1.072.000 + $1,100,000) ÷ 21 + ($4,100,000 + 365) v Ratio of fixed assets to long-term liabilities $2.690,000 + $1,690,000 Ratio of liabilities to stockholders' equity $2,550,000 + $4,059,000 - v ($976,800 + $127,000) + $127,000 • - v Times interest earned Feedback Balance Sheet Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 20Y6 Assets Current assets: Cash $823,000 Marketable securities Accounts receivable (net) Inventory Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) Total assets Liabilities Current liabilities Long-term liabilities Total liabilities Stockholders' Equity Preferred stock, $10 par
Mastery Problem: Financial Statement Analysis Liquidity and Solvency Measures Your friend, another accountant, has bet you that with your knowledge of accounting and just the computations for common analytical measures, you can figure out many aspects of a company's financial statements. You take the bet! Match each computation to one of the liquidity and solvency measures in the table. (Hint: Begin by looking for simple computations and identifying the amounts in those computations. Look for other measures that use those amounts.) Liquidity and Solvency Measures Computations Working capital $3,095,000 - $860,000 ► Current ratio $3.095.000 + $860,000 - v Quick ratio $1,866,000 + $860,000 - V Accounts receivable turnover $8,260,000 + [($714,000 + $740,000) + 21- Number of days' sales in receivables [($714,000 + $740,000) + 21 + ($8,260,000 + 365) - Inventory turnover $4,100,000 + [($1,072.000 + $1,100,000) + 21 - Number of days' sales in inventory [($1.072.000 + $1,100,000) ÷ 21 + ($4,100,000 + 365) v Ratio of fixed assets to long-term liabilities $2.690,000 + $1,690,000 Ratio of liabilities to stockholders' equity $2,550,000 + $4,059,000 - v ($976,800 + $127,000) + $127,000 • - v Times interest earned Feedback Balance Sheet Use the following balance sheet form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part. You will identify other amounts for the balance sheet on the Profitability Measures part. If you have a choice of two amounts, assume the first amount in the ratio is for the end of the year. Compute any missing amounts. Balance Sheet December 31, 20Y6 Assets Current assets: Cash $823,000 Marketable securities Accounts receivable (net) Inventory Prepaid expenses Total current assets Long-term investments Property, plant, and equipment (net) Total assets Liabilities Current liabilities Long-term liabilities Total liabilities Stockholders' Equity Preferred stock, $10 par
Pkg Acc Infor Systems MS VISIO CD
10th Edition
ISBN:9781133935940
Author:Ulric J. Gelinas
Publisher:Ulric J. Gelinas
Chapter16: The General Ledger And Business Reporting (gl/br) Process
Section: Chapter Questions
Problem 5P
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