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Ratio Formula Net credit sales Average accounts receivable Accounts receivable turnover Cost of goods sold Average inventory Inventory turnover = Current ratio = Current assets 9:4

Ratio Formula Net credit sales Average accounts receivable Accounts receivable turnover Cost of goods sold Average inventory Inventory turnover = Current ratio = Current assets 9:4

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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Ratio Formula Net credit sales Average accounts receivable 1.Accounts receivable turnover Cost of goods sold Average inventory 2. Inventory turnover = 3. Current ratio = Current assets Current liabilities Total liabilities Total equity 4 Debt to equity ratio = 5.Cash ratio = Cash and short-term investments Current liabilities Net income + [Interest expense x (1- tax rate)] Average total assets 6.Return on assets ratio = 7. Quick ratio = Cash + Accounts receivable + Short term investments Current liabilities Net income Average equity 8 Return on equity ratio = 9. Gross profit percentage ratio = Gross profit (or Gross margin) Net sales 10. Net profit margin percentage Net income ratio = Net sales (Net Income Average number of common shares outstanding 11. Earnings per share (EPS) = - Preferred Dividends)
Transcribed Image Text:Ratio Formula Net credit sales Average accounts receivable 1.Accounts receivable turnover Cost of goods sold Average inventory 2. Inventory turnover = 3. Current ratio = Current assets Current liabilities Total liabilities Total equity 4 Debt to equity ratio = 5.Cash ratio = Cash and short-term investments Current liabilities Net income + [Interest expense x (1- tax rate)] Average total assets 6.Return on assets ratio = 7. Quick ratio = Cash + Accounts receivable + Short term investments Current liabilities Net income Average equity 8 Return on equity ratio = 9. Gross profit percentage ratio = Gross profit (or Gross margin) Net sales 10. Net profit margin percentage Net income ratio = Net sales (Net Income Average number of common shares outstanding 11. Earnings per share (EPS) = - Preferred Dividends)
The following select information is taken from Blueberry Pie Corp.'s statements of financial position at December 31, 2019 and 2020, and their income statement for calendar 2020: 2020 2019 Assets: $ 18,000 25,000 38,000 61,000 $ 22,000 -0- Cash. Short Term investments ...... Accounts receivable. Inventory Prepaid insurance Long-term investments Equipment (net). Land 42,000 6,000 49,000 130,000 33,000 55,000 $ 415,000 52,000 9,000 20,000 130,000 33,000 55,000 $ 363,000 Goodwil.. Total assets $ 62,250 305,000 Net income Sales (all on credit). Cost of goods sold. 135,000 Interest 15,600 expense... Income tax expense 17,450 Tax rate = 20% Instructions: From the above information, calculate the following ratios for 2020 (using formula sheet provided rounding to 1 decimal place Ratio for 2020 Amount 1.Inventory turnover 2. Accounts receivable turnover 3. Return on assets ratio 4. Gross profit percentage ratio
Transcribed Image Text:The following select information is taken from Blueberry Pie Corp.'s statements of financial position at December 31, 2019 and 2020, and their income statement for calendar 2020: 2020 2019 Assets: $ 18,000 25,000 38,000 61,000 $ 22,000 -0- Cash. Short Term investments ...... Accounts receivable. Inventory Prepaid insurance Long-term investments Equipment (net). Land 42,000 6,000 49,000 130,000 33,000 55,000 $ 415,000 52,000 9,000 20,000 130,000 33,000 55,000 $ 363,000 Goodwil.. Total assets $ 62,250 305,000 Net income Sales (all on credit). Cost of goods sold. 135,000 Interest 15,600 expense... Income tax expense 17,450 Tax rate = 20% Instructions: From the above information, calculate the following ratios for 2020 (using formula sheet provided rounding to 1 decimal place Ratio for 2020 Amount 1.Inventory turnover 2. Accounts receivable turnover 3. Return on assets ratio 4. Gross profit percentage ratio
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