Problem 1: Compute for the profitability ratios of both Ellane and meLanie. Which of the two companies do you believe is more profitable? Problem 2: Compute for operational efficiency ratios of both Ellane and meLanie. Which of the two companies is more efficient? Problem 3: Compute for the financial health ratios of both ellane and meLanie. Which of the two companies is more financially healthy? Below are the comparative Statement of Comprehensive Income & Statement of Financial Position ofEllane Company & Lanie Company:Statement of Comprehensive IncomeEllane Company2013Melanie Company201420132014Net SalesCost of Goods Sold3,407,921.002,377,078.00665,005.00745,883.60530,200.00173,800.00Selling ExpensesGeneral and administrative expenses119,900.0014,630.00Interest ExpenseNet Income19.756.0026.182.004.954.40P22,299.20Statement of Financial PositionElane CompanyLanie Company201420132014201396,102.00345,600.00225,600.0020,000.001.100.000.001.787.302.0049,939.2068,543.0040,345.2016,000.00Current AssetsAccounts ReceivableInventoryPrepaid AssetsEquipment, netTotal Assets71,715.00350,000.00275,430.0020,000.001.146.882.001.864.027.0048,774.0075,675.0043,890.2015,000.00307.401.60 276.786.40490,740.80 451,613.80Current Liabilities143,715.00166,793.0077,765.6066,618.20Long-Term LiabilitiesOwner's Capital65,164.00347.811.20 329,995.60238,700.00198,000.0055,000.001.481.612.001.422.509.00Total Liabilities and Owner's Capital 1.864,027.001.787.302.00490.740.80451.613.80

Ratio analysis is an important part of interpreting the performance of financial accounts. It…

Answered: Problem 1: Compute for the…

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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Problem 1:
Compute for the profitability ratios of both Ellane and meLanie. Which of the two companies do you believe is more
profitable?
Problem 2:
Compute for operational efficiency ratios of both Ellane and meLanie. Which of the two companies is more efficient?
Problem 3:
Compute for the financial health ratios of both ellane and meLanie. Which of the two companies is more
financially healthy?

Below are the comparative Statement of Comprehensive Income & Statement of Financial Position of
Ellane Company & Lanie Company:
Statement of Comprehensive Income
Ellane Company
2013
Melanie Company
2014
2013
2014
Net Sales
Cost of Goods Sold
3,407,921.00
2,377,078.00
665,005.00
745,883.60
530,200.00
173,800.00
Selling Expenses
General and administrative expenses
119,900.00
14,630.00
Interest Expense
Net Income
19.756.00
26.182.00
4.954.40
P22,299.20
Statement of Financial Position
Elane Company
Lanie Company
2014
2013
2014
2013
96,102.00
345,600.00
225,600.00
20,000.00
1.100.000.00
1.787.302.00
49,939.20
68,543.00
40,345.20
16,000.00
Current Assets
Accounts Receivable
Inventory
Prepaid Assets
Equipment, net
Total Assets
71,715.00
350,000.00
275,430.00
20,000.00
1.146.882.00
1.864.027.00
48,774.00
75,675.00
43,890.20
15,000.00
307.401.60 276.786.40
490,740.80 451,613.80
Current Liabilities
143,715.00
166,793.00
77,765.60
66,618.20
Long-Term Liabilities
Owner's Capital
65,164.00
347.811.20 329,995.60
238,700.00
198,000.00
55,000.00
1.481.612.00
1.422.509.00
Total Liabilities and Owner's Capital 1.864,027.00
1.787.302.00
490.740.80
451.613.80

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