Compute the given ratios for the Department H

Answer to Problem 3P
Ratios of the Department H:
Return on equity | 298.25% |
Return on assets | 19.73% |
Total asset turnover | 2.31 |
Inventory turnover | 5.26 |
1.17 | |
Quick ratio | 0.34 |
Cash coverage ratio | 12.14 |
Debt-to-equity ratio | 29.63 |
Table (1)
Explanation of Solution
Return on Equity:
It is one of the profitability ratios. Return on equity ratio is used to determine the relationship between the net income available for the common stockholders’ and the average common stock. Return on equity is calculated as follows:
Return on assets:
Return on 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.
Total Asset Turnover ratio:
The total asset turnover ratio is used to measure the performance of the company that is the company using its assets to generate revenue. Total Asset turnover tatio is calculated as follows:
Inventory turnover ratio:
Inventory turnover ratio is one of the Assets Turnover ratios. 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 as follows:
Current ratio:
Current ratio is one of the
Quick Ratio:
It is a ratio used to determine a company’s ability to pay back its current liabilities by liquid assets that are current assets except inventory and prepaid expenses.
Cash coverage ratio:
This ratio indicates the relationship between the cash flows from operating activities and the interest payments. This ratio is calculated as follows:
Debt-equity ratio:
The debt-to-equity ratio indicates that the company’s debt as a proportion of its stockholders’ equity.
Calculate the given ratios:
Ratio | Formula | Calculation | Result |
Return on equity | 298.25% | ||
Return on assets | 19.73% | ||
Total asset turnover | 2.31 | ||
Inventory turnover | 5.26 | ||
Current ratio | 1.17 | ||
Quick ratio | 0.34 | ||
Cash coverage ratio | 12.14 | ||
Debt-to-equity ratio | 29.63 |
Table (2)
Want to see more full solutions like this?
Chapter 13 Solutions
FINANCIAL ACCOUNTING W/CONNECT PKG
- need solutionarrow_forwardQuestion: Shakti Security Systems had sales of 3,000 units at $50 per unit last year. The marketing manager projects a 20 percent increase in unit volume sales this year with a 10 percent price increase. Returned merchandise will represent 6 percent of total sales. What is your net dollar sales projection for this year.Correct Answerarrow_forwardComute the return on total assetsarrow_forward
- General accounting questionarrow_forwardIf image is blurr then please comment don't give assumption answer plz . I will write values . i need correct anarrow_forwardTotal costs were $81,300 when 33,000 units were produced and $102,500 when 42,000 units were produced. Use the High-Low Method to find the estimated total costs for a production level of 35,000 units.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





