
Concept explainers
1.
Concept Introduction:
Financial ratios: Ratio helps investor and the company to analyze the growth of the business. It helps to take decisions to management of business and helps investor in taking the decision of investment. Financial ratio also helps to compare the company with previous data and from other companies.
To Calculate:
Gross Margin (with or without service revenue) and net profit margin ratio.
1.

Answer to Problem 13SP
Gross profit Margin (L/B)*100 | 24.8% |
Gross profit Margin (M/C)*100 | 68.1% |
Net Profit Margin (E/C)*100 | 42.8% |
Explanation of Solution
Computer Services Revenue (A) | 25307 |
Net Sales (B) | 18693 |
Total Sales and revenue (C) | 44000 |
Cost of goods sold (D) | 14052 |
Net Income (E) | 18833 |
Quick Assets (F) | 90924 |
Current Assets (G) | 95568 |
Total Assets (H) | 120268 |
Current liabilities (I) | 875 |
Total Liabilities (J) | 875 |
Total Equities (K) | 119393 |
Gross Profit (without service revenue)(B-D)= L | 4641 |
Gross Profit (with service revenue) (C-D)= M | 29948 |
Gross profit Margin (L/B)*100 | 24.8% |
Gross profit Margin (M/C)*100 | 68.1% |
Net Profit Margin (E/C)*100 | 42.8% |
2.
Concept Introduction:
Financial ratios: Ratio helps investor and the company to analyze the growth of the business. It helps to take decisions to management of business and helps investor in taking the decision of investment. Financial ratio also helps to compare the company with previous data and from other companies.
To Calculate:
2.

Answer to Problem 13SP
Current Ratio (G/I) | 109.2 |
Quick Ratio (F/I) | 103.9 |
Explanation of Solution
Computer Services Revenue (A) | 25307 |
Net Sales (B) | 18693 |
Total Sales and revenue (C) | 44000 |
Cost of goods sold (D) | 14052 |
Net Income (E) | 18833 |
Quick Assets (F) | 90924 |
Current Assets (G) | 95568 |
Total Assets (H) | 120268 |
Current liabilities (I) | 875 |
Total Liabilities (J) | 875 |
Total Equities (K) | 119393 |
Current Ratio (G/I) | 109.2 |
Quick Ratio (F/I) | 103.9 |
3.
Concept Introduction:
Financial ratios: Ratio helps investor and the company to analyze the growth of the business. It helps to take decisions to management of business and helps investor in taking the decision of investment. Financial ratio also helps to compare the company with previous data and from other companies.
To Calculate:
Debt ratio and Equity ratio.
3.

Answer to Problem 13SP
Debt ratio (J/H)*100 | 0.7% |
Equity ratio (K/H)*100 | 99.3% |
Explanation of Solution
Computer Services Revenue (A) | 25307 |
Net Sales (B) | 18693 |
Total Sales and revenue (C) | 44000 |
Cost of goods sold (D) | 14052 |
Net Income (E) | 18833 |
Quick Assets (F) | 90924 |
Current Assets (G) | 95568 |
Total Assets (H) | 120268 |
Current liabilities (I) | 875 |
Total Liabilities (J) | 875 |
Total Equities (K) | 119393 |
Debt ratio (J/H)*100 | 0.7% |
Equity ratio (K/H)*100 | 99.3% |
4.
Concept Introduction:
Financial ratios: Ratio helps investor and the company to analyze the growth of the business. It helps to take decisions to management of business and helps investor in taking the decision of investment. Financial ratio also helps to compare the company with previous data and from other companies.
To Calculate:
Percent of current assets and long term assets.
4.

Answer to Problem 13SP
Current assets percentage (G/H)*100 | 79.5% |
Long term assets percentage (N/H)*100 | 20.5% |
Explanation of Solution
Computer Services Revenue (A) | 25307 |
Net Sales (B) | 18693 |
Total Sales and revenue (C) | 44000 |
Cost of goods sold (D) | 14052 |
Net Income (E) | 18833 |
Quick Assets (F) | 90924 |
Current Assets (G) | 95568 |
Total Assets (H) | 120268 |
Current liabilities (I) | 875 |
Total Liabilities (J) | 875 |
Total Equities (K) | 119393 |
Long term Assets (N)= H-G | 24700 |
Current assets percentage (G/H)*100 | 79.5% |
Long term assets percentage (N/H)*100 | 20.5% |
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Chapter 13 Solutions
Financial Accounting: Information for Decisions
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