Ratio Analysis Formula current Current ratio assets/ Current liabilities Account Net sales/ Receivab Average le accounts Turnove receivable, net Average 3651 Collecti Account on Receivable Period Turnover Inventor Cost of goods y Turnove sold/ Average inventory Days in Average Inventor inventory/3 cost of good sold 365 current net cash Cash provided by Debt operating activities/ Coverag average e current liability Profit Net Margin income/ne t sales $20,245/ $11,245=1.8 $48,750/ $50,450=0.9 61,750/8100=7.6 362.000/4120=87.8 365/7.6-48 365/87.8-4.15 39,900/8,020-4.97 27,680/32,500=0.8 8.020/39,900*365=73. 32.500/27,680*365=4 28 4900/11,245+10.300/2= 0.45 25,900/52,640+50,450/2= 0.50 3,245/61750=0.050 13,580/362,000=0.03 Al Pan Interpret Oth da, ation wwwnnn aim Inc 00000 0.9 7.6 87.8 48.02 4.15 4.97 0.8 73.3 428. 5 0.45 0.50 0.03 0.05

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Compare the Solvency, Liquidity and Profitability for the two companies
Ratio Analysis Formula
current
Current
ratio
assets/
Current
liabilities
Account
Net sales/
Receivab Average
le
accounts
Turnove
receivable,
T
net
Average
365/
Collecti
Account
on
Receivable
Period Turnover
Inventor Cost of
goods
y
Turnove
sold/
r
Average
inventory
Days in
Average
Inventor
inventory/
cost of
good
sold 365
current
net cash
Cash
provided by
Debt
operating
activities/
Coverag
average
current
liability
Profit
Net
Margin
income/ne
t sales
$20,245/$11,245=1.8
$48,750/ $50,450=0.9
61,750/8100=7.6
362.000/4120-87.8
365/7.6-48
365/87.8-4.15
39,900/8,020-4.97
27,680/32,500=0.8
8.020/39,900*365-73.
3
32.500/27,680*365-4
28
4900/11,245+10.300/2=
0.45
25,900/52,640+50,450/2=
0.50
3,245/61750=0.050
13,580/362,000=0.03
AI Pan Interpret
Oth
da,
ation
aim
Inc
1.8 0.9
7.6 87.8
48.02
4.15
4.97 0.8
73.3
428.
5
0.45 0.50
0.03
0.05
Transcribed Image Text:Ratio Analysis Formula current Current ratio assets/ Current liabilities Account Net sales/ Receivab Average le accounts Turnove receivable, T net Average 365/ Collecti Account on Receivable Period Turnover Inventor Cost of goods y Turnove sold/ r Average inventory Days in Average Inventor inventory/ cost of good sold 365 current net cash Cash provided by Debt operating activities/ Coverag average current liability Profit Net Margin income/ne t sales $20,245/$11,245=1.8 $48,750/ $50,450=0.9 61,750/8100=7.6 362.000/4120-87.8 365/7.6-48 365/87.8-4.15 39,900/8,020-4.97 27,680/32,500=0.8 8.020/39,900*365-73. 3 32.500/27,680*365-4 28 4900/11,245+10.300/2= 0.45 25,900/52,640+50,450/2= 0.50 3,245/61750=0.050 13,580/362,000=0.03 AI Pan Interpret Oth da, ation aim Inc 1.8 0.9 7.6 87.8 48.02 4.15 4.97 0.8 73.3 428. 5 0.45 0.50 0.03 0.05
Net sales/
Asset
Turnove
61,750/43,850+41,850
/2=1.44
Average
1.44
2.25
r
total assets
362,000/159,750+161,
250/2=2.25
Return
Net
3,245/41,850-0.077 0.077 0.08
on
income/tot
Assets
al assets
13,580/159,750=0.08
Return
3245-
19
0.14
Net income-
Preferred
dividend/Ave
on
495/13,240+15450=
Commo
0.19
rage
n
common
Stockhol stockholders 13,580-
der's
3850/62480+71,450=
Equity equity
0.14
Debt to
Assets
Times
Interest
Earned
Cash
4900/28,750+26050/2 0.17 0.26
= 0.17
Debt
Coverag by
2,953 1130
free
0
Cash
Flow
net cash
provided
operating 25,900/94,500+98,300
activities/a /2=0.26
verage
total
liability
net cash
4,900-1,452-495=
provided
2,953
by
operating 25,900-10,750-
activities- 3,850-11,300
Capital
expenditur
e- cash
dividends
Transcribed Image Text:Net sales/ Asset Turnove 61,750/43,850+41,850 /2=1.44 Average 1.44 2.25 r total assets 362,000/159,750+161, 250/2=2.25 Return Net 3,245/41,850-0.077 0.077 0.08 on income/tot Assets al assets 13,580/159,750=0.08 Return 3245- 19 0.14 Net income- Preferred dividend/Ave on 495/13,240+15450= Commo 0.19 rage n common Stockhol stockholders 13,580- der's 3850/62480+71,450= Equity equity 0.14 Debt to Assets Times Interest Earned Cash 4900/28,750+26050/2 0.17 0.26 = 0.17 Debt Coverag by 2,953 1130 free 0 Cash Flow net cash provided operating 25,900/94,500+98,300 activities/a /2=0.26 verage total liability net cash 4,900-1,452-495= provided 2,953 by operating 25,900-10,750- activities- 3,850-11,300 Capital expenditur e- cash dividends
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education