The condensed financial statements of Evoc Company for the years 2019 and 2020 are presented as follows. Evoc Company Statements of Financial Position December 31 2020 2019 Intangibles and other assets € 530 € 510 Property, plant, and equipment 420 380 Investments 10 10 Current assets Prepaid expenses €120 €160 Inventory 430 390 Accounts receivable (net) 470 433 Cash and cash equivalents 330 1,350 360 1,343 Total assets €2,310 €2,243 Equity €1,020 €1,040 Non‐current liabilities 390 393 Current liabilities 900 810 Total equity and liabilities €2,310 €2,243 Evoc Company Income Statements For the Years Ended December 31 2020 2019 Sales revenue €4,000 €3,600 Costs and expenses Cost of goods sold 984 895 Selling and administrative expenses 2,400 2,330 Interest expense 10 20 Total costs and expenses 3,394 3,245 Income before income taxes 606 355 Income tax expense 242 142 Net income € 364 € 213 Compute the following ratios for 2020 and 2019: a. Current ratio b. Inventory turnover (Inventory on 12/31/18 was €326)

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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The condensed financial statements of Evoc Company for the years 2019 and 2020 are presented as follows.

Evoc Company Statements of Financial Position December 31
	2020	2019
Intangibles and other assets		€ 530		€ 510
Property, plant, and equipment		420		380
Investments		10		10
Current assets
Prepaid expenses	€120		€160
Inventory	430		390
Accounts receivable (net)	470		433
Cash and cash equivalents	330	1,350	360	1,343
Total assets		€2,310		€2,243
Equity		€1,020		€1,040
Non‐current liabilities		390		393
Current liabilities		900		810
Total equity and liabilities		€2,310		€2,243

Evoc Company Income Statements For the Years Ended December 31
	2020	2019
Sales revenue	€4,000	€3,600
Costs and expenses
Cost of goods sold	984	895
Selling and administrative expenses	2,400	2,330
Interest expense	10	20
Total costs and expenses	3,394	3,245
Income before income taxes	606	355
Income tax expense	242	142
Net income	€ 364	€ 213

Compute the following ratios for 2020 and 2019:

a. Current ratio

b. Inventory turnover (Inventory on 12/31/18 was €326)

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