
a)
Calculate the
a)

Explanation of Solution
Current ratio:
Current ratio is one of the
The calculation of current ratio for the year 2019 is as follows:
Hence, the current ratio for the year 2019 is 4:1.
b)
Calculate the quick ratio for the year 2019.
b)

Explanation of Solution
Quick ratio:
It is a ratio used to determine a company’s ability to pay back its current liabilities. Liquid assets that are current assets except inventory and prepaid expenses.
The calculation of quick ratio for the year 2019 is as follows:
Hence, the quick ratio for the year 2019 is 2.14:1.
Working note:
The calculation of quick assets for the year 2019 is as follows:
Hence, the quick assets is $60,000,000.
(1)
c)
Calculate the average days to collect
c)

Explanation of Solution
Average days to collect accounts receivable:
This ratio is used to determine the number of days a particular company takes to collect accounts receivables. It is calculated by using the formula:
The calculation of average days to collect accounts receivable for the year 2019 is as follows:
Hence, the average days to collect accounts receivable for the year 2019 is 92.17 days.
Working note:
The calculation of the amount of average accounts receivable for the year 2109:
Hence, the amount of average accounts receivable for the year 2019 is $45,500,000.
The calculation of receivables turnover for the year 2019 is as follows:
Hence, the receivables turn over for the year 2019 is 3.96 times.
(2)
d)
Calculate the inventory turnover for the year 2019.
d)

Explanation of Solution
Inventory Turnover Ratio:
This ratio is a financial metric used by a company to quantify the number of times inventory is used or sold during the accounting period. It is calculated by using the formula:
The calculation of inventory turnover ratio for the year 2019 is as follows:
Hence, the inventory turnover ratio for the year 2019 is 2.67 times.
Working note:
The calculation of average inventory for the year 2019 is as follows:
Hence, the average inventory is $55,000,000.
(3)
e)
Calculate the book value per share for the year 2019.
e)

Explanation of Solution
Book value per share of common stock:
This ratio is a measure of a share of common stock that is used to determine the value of per share based on the equity available to the common stockholders. This ratio is calculated by using the formula:
The calculation of book value per share for the year 2019 is as follows:
Hence, the book value per share for the year 2019 is $17.40 per share.
f)
Calculate the earnings per share for the year 2019.
f)

Explanation of Solution
Earnings per Share:
Earnings per share help to measure the profitability of a company. Earnings per share are the amount of profit that is allocated to each share of outstanding stock.
The calculation of earnings per share for the year 2019 is as follows:
Hence, the earnings per share for the year 2019 is $1 per share.
g)
Calculate the price-earnings ratio for the year 2019.
g)

Explanation of Solution
Price/Earnings Ratio:
The price/earnings ratio shows the market value of the amount invested to earn $1 by a company. It is major tool used by investors for making decisions related to the investment in a company.
The calculation of price-earnings ratio for the year 2019 is as follows:
Hence, the price-earnings ratio for the year 2019 is $16.00 per share.
h)
Calculate the debt to asset ratio for the year 2019.
h)

Explanation of Solution
Debt to assets ratio:
The debt to asset ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts. Debt to assets ratio is calculated by using the formula:
The calculation of debt to assets ratio for the year 2019 is as follows:
Hence, the debt to assets ratio for the year 2019 is 51.36%.
i)
Calculate the
i)

Explanation of Solution
Return on investments (assets):
Return on investments (assets) is the financial ratio which determines the amount of net income earned by the business with the use of total assets owned by it. It indicates the magnitude of the company’s earnings with relative to its total assets. Return on investment is calculated as follows:
The calculation of return on investment for the year 2019 is as follows:
Hence, the return on investment for the year 2019 is 2.67%.
Working notes:
The calculation of the amount of average total assets for Year 2019.
j)
Calculate the return on equity for the year 2019.
j)

Explanation of Solution
Return on equity ratio:
It is a profitability ratio that measures the profit generating ability of the company from the invested money of the shareholders. The formula to calculate the return on equity is as follows:
The calculation of return on equity for the year 2019 is as follows:
Hence, the return on equity for the year 2019 is 5.69%.
Working notes:
The calculation of average total
Hence, the average total stockholders’ equity is $105,500,000.
(5)
Want to see more full solutions like this?
Chapter 13 Solutions
Fundamental Managerial Accounting Concepts
- During September, the assembly department completed 10,500 units of a product that had a standard materials cost of 3.0 square feet per unit at $2.40 per square foot. The actual materials purchased consisted of 22,000 square feet at $2.60 per square foot, for a total cost of $57,200. The actual material used during this period was 25,500 square feet. Compute the materials price variance and materials usage variance.arrow_forwardBluesy Electronics recorded the following financial data: Net Sales $720,500 Average Inventory at Cost = $80,200 Gross Margin Percentage = 42% Calculate the GMROI.arrow_forwardNeed help this question solutionarrow_forward
- XYZ Company has a gross profit margin of 0.30, an operating profit margin of 18%, a total asset turnover ratio of 2.0x, and cost of goods sold of $700,000. The company's tax rate is 35%, and it has no debt. Calculate XYZ Company's Return on Assets (ROA).arrow_forwardMON Pools builds custom swimming pools. MON budgets that they will build 16 pools during the month of June at a price of $22,750 per pool. The actual pools built by MON during June were 13 pools at a price of $23,420 per pool. What is the Flexible Budget Variance for June?arrow_forwardAnderson Corp. pays its employees every Friday for work performed through that Friday. Anderson employees work Monday through Friday and do not work on weekends. The gross payroll for Anderson is $12,500 each week. Anderson will pay its employees $12,500 on Friday, May 8th. This payroll is for wages earned Monday, May 4th through Friday, May 8th. How much of the $12,500 paid on May 8th should be expensed in May?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





