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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:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
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
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