Use this data to compute the following ratios:1.Current ratio (Dec 2020)2.Acid-test Ratio (Dec 2020)3.Accounts Receivable Turnover4.Inventory Turnover5.Return on Assets6.Profit Margin on Sales7.Return on Equity8.Times Interest Earned b.Discuss the financial condition of ABC Company, Inc. based on what you learn from computing the ratios. 9. The Balance Sheet and Income Statement data are shown believe for ABC Company, Inc.ABC Company, Inc.Balance SheetAs of Dec. 31, 2019 and 2020CashAccounts Receivable (Net of Allowance)Short-Term InvestmentsInventoryPrepaid ExpensesProperty, Plant & Equip. (Net of Deprec)Current LiabilitiesDec. 31, 2020 Dec. 31, 201925,000112,00031,000268,0009,000420,000201,0008,000151,00050,000300,00012,000460,000277,000250,000100,000354,000Bonds Payable (due in 10 years)Common Stock260,000100,000Retained Earnings304,000ABC Company, Inc.Income StatementFor the Year Ended Dec. 31, 202026080005673000935000-581000-26000-65600202400SalesCost of Goods SoldGross ProfitOperating ExpensesInterest ExpenseIncome Tax ExpenseNet IncomeCamScanner

Answered: Use this data to compute the following…

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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Use this data to compute the following ratios:

1.Current ratio (Dec 2020

)2.Acid-test Ratio (Dec 2020)

3.Accounts Receivable Turnover

4.Inventory Turnover

5.Return on Assets

6.Profit Margin on Sales

7.Return on Equity

8.Times Interest Earned

b.Discuss the financial condition of ABC Company, Inc. based on what you learn from computing the ratios.

9. The Balance Sheet and Income Statement data are shown believe for ABC Company, Inc.
ABC Company, Inc.
Balance Sheet
As of Dec. 31, 2019 and 2020
Cash
Accounts Receivable (Net of Allowance)
Short-Term Investments
Inventory
Prepaid Expenses
Property, Plant & Equip. (Net of Deprec)
Current Liabilities
Dec. 31, 2020 Dec. 31, 2019
25,000
112,000
31,000
268,000
9,000
420,000
201,000
8,000
151,000
50,000
300,000
12,000
460,000
277,000
250,000
100,000
354,000
Bonds Payable (due in 10 years)
Common Stock
260,000
100,000
Retained Earnings
304,000
ABC Company, Inc.
Income Statement
For the Year Ended Dec. 31, 2020
2608000
5673000
935000
-581000
-26000
-65600
202400
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Interest Expense
Income Tax Expense
Net Income
CamScanner

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Ratio analysis means where different ratio of various years of years companies has been compared and results are interpreted to make effective decision regarding future course of action.

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