The La Hermosa Company asked you to interpret the following ratios provided by its accountant: Acid-test ratio Times interest earned Gross margin ratio Inventory turnover Debt to equity ratio Ratio of operating expenses to sales 1.5 to 1 8 times 40% 6 times .9 to I 20% 1. Total Sales 2. Ending Inventory 3. Total Purchases 4. Operating Expenses 5. Operating Income- 6. Interest Expense 7. Quick Assets 8. Total current assets 9. Bonds payable 10. Total current liabilities 105 The gross profit for the year ended December 31, 20CY was 1,200,000. Total stockholders' equity on Dec. 31, 20CY amounted to 1,800,000. The beginning balance of merchandise inventory, was 400,000., The company's long-term liabilities consisted of bonds payable with interest at 10%. You decided to reconstruct the company's financial statements based on the limited information given to serve as basis for further analysis. REQUIRED: - Compute for the following:
The La Hermosa Company asked you to interpret the following ratios provided by its accountant: Acid-test ratio Times interest earned Gross margin ratio Inventory turnover Debt to equity ratio Ratio of operating expenses to sales 1.5 to 1 8 times 40% 6 times .9 to I 20% 1. Total Sales 2. Ending Inventory 3. Total Purchases 4. Operating Expenses 5. Operating Income- 6. Interest Expense 7. Quick Assets 8. Total current assets 9. Bonds payable 10. Total current liabilities 105 The gross profit for the year ended December 31, 20CY was 1,200,000. Total stockholders' equity on Dec. 31, 20CY amounted to 1,800,000. The beginning balance of merchandise inventory, was 400,000., The company's long-term liabilities consisted of bonds payable with interest at 10%. You decided to reconstruct the company's financial statements based on the limited information given to serve as basis for further analysis. REQUIRED: - Compute for the following:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please answer asap. Thank you!!

Transcribed Image Text:PROBLEM 3
The La Hermosa Company asked you to interpret the following ratios provided by
its accountant:
Acid-test ratio
Times interest earned
Gross margin ratio
Inventory turnover
Debt to equity ratio
Ratio of operating expenses to sales
1.
Total Sales
2. Ending Inventory
3.
Total Purchases
4.
5.
The gross profit for the year ended December 31, 20CY was 1,200,000. Total
stockholders' equity on Dec. 31, 20CY amounted to 1,800,000. The beginning
balance of merchandise inventory, was 400,000., The company's long-term
liabilities consisted of bonds payable with interest at 10%. You decided to
reconstruct the company's financial statements based on the limited information
given to serve as basis for further analysis.
REQUIRED: Compute for the following:
Operating Expenses
Operating Income
Interest Expense
6.
7.
8.
9. Bonds payable
10. Total current liabilities
1.5 to 1
8 times
40%
6 times
.9 to I
20%
Quick Assets
Total current assets
1045
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 7 steps

Knowledge Booster
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.Recommended textbooks for you


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,


Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,

Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON

Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education