Cash Ratio: It is useful to evaluate the cash available as cash is an important factor for day to day operations for any business. It comes under liquidity ratios and cash is divided by current liabilities compute this ratio.
Times-interest-earned Ratio: It reflects company’s earnings as the times of its interest expenses. It is used to evaluate the ability to pay interest expense, a company has. Higher ratio is preferred as it enables to pay the obligation of interest.
Inventory Turnover: It is a part of efficiency ratios used during the process of ratio analysis. It reflects the number of times a company’s inventory is converted into sale during a particular period. The cost of goods sold is divided by average inventory to get the value of inventory turnover.
Gross Profit Percentage: This ratio evaluates the profitability of each dollar of sale. Gross profit is first step toward the profitability so companies are very keen to have a higher gross profit percentage. It enables them to cover the operating expenses related to business.
Debt to Equity Ratio: This ratio reflects the relationship of company’s total liabilities to total equity. It is used to represent financial leverage in the business. Higher ratio means that the company has used debts more than the owner’s capital to acquire the assets.
Earnings per Share of Common Stock: It is a mandatory term to be reported with the financials of a company in the annual report. It reflects the amount earned or lost on each outstanding common equity share. It is widely used to evaluate the performance of a business.
Price/Earnings Ratio: It depicts the relation of market price of a share to earnings per share of that company. The price/earnings ratio presents the market value of the amount invested to earn $1 by a company. It is major tool to be used by investors before the decisions related to investments in a company.
1.
a.
To Compute: The current ratio of G Company for 2017 and 2018.
b.
To Compute: The cash ratio of G Company for 2017 and 2018.
c.
To Compute: The times-interest-earned ratio of G Company for 2017 and 2018.
d.
To Compute: The inventory turnover of G Company for 2017 and 2018.
e.
To Compute: Gross profit percentage of G Company for 2017 and 2018.
f.
To Compute: The debt to equity ratio of company G for 2017 and 2018.
g.
To Compute: The rate of return on common stockholders’ equity of company G for 2017 and 2018.
h.
To Compute: The earnings per share of common stock of company G for 2017 and 2018.
i.
To Compute: The price/earnings ratio of company G for 2017 and 2018.
2.
a.
To Analyze: The change in company G’ ability to pay debts and to sell inventory during 2018.
b.
To Analyze: The change in investment attractiveness of company G’s common stock during 2018.
Want to see the full answer?
Check out a sample textbook solution
Chapter 17 Solutions
Horngren's Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)
- Tower Company owned a service truck that was purchased at the beginning of Year 1 for $48,000. It had an estimated life of three years and an estimated salvage value of $3,000. Tower company uses straight-line depreciation. Its financial condition as of January 1, Year 3, is shown on the first line of the horizontal statements model. In Year 3, Tower Company spent the following amounts on the truck: January 4 Overhauled the engine for $7,600. The estimated life was extended one additional year, and the salvage value was revised to $2,000. July 6 Obtained oil change and transmission service, $410. August 7 Replaced the fan belt and battery, $510. December 31 Purchased gasoline for the year, $9,100. December 31 Recognized Year 3 depreciation expense. Required Record the Year 3 transactions in a statements model. Note: In the Statement of Cash Flows column, use the initials OA for operating activities, FA for financing activities, or IA for investing activity. Enter any decreases to…arrow_forwardCara's Cookie Company provided the following accounts from its year-end trial balance. (Click the icon to view the year-end trial balance accounts.) The company is subject to a 35% income tax rate. Requirement Prepare a multiple-step income statement for the current year. Trial balance Cara's Cookie Company Adjusted Trial Balance (Selected Accounts) For the Current Year Ended Account Debit Credit Prepare Cara's multiple-step income statement for the current year, one section at a time. (List the subheadings in the order they Cara's Cookie Company Statement of Net Income Common Stock (no par): Beginning Balance Retained Earnings: Beginning Balance $ 462,000 1,200,000 Accumulated Other Comprehensive Income: Beginning Balance Dividends $ 63,000 69,000 Sales 3,200,000 For the Current Year Ended Sales Less: Cost of Goods Sold 3,200,000 610,000 Interest Income 3,800 Dividend Income 3,600 Gross Profit Operating Expenses: Selling Expenses: Gain on Disposal of Plant Assets 92,000 2,590,000…arrow_forwardHistory 口 AA 1 ୪ Fri Feb 14 2:45 PM Mc Gw Mini Cases Qmcgrow hill goodweek tires pr × | Ask a Question | bartleby × + Bookmarks Profiles Tab Window Help Graw McGraw Hill MC ☑ Hill prod.reader-ui.prod.mheducation.com/epub/sn_d82a5/data-uuid-0e12dd568f3f4e438c00faed4ea436f1 Chrome File Edit View Λ LTI Launch 88 Netflix YouTube A BlackBoard Mail - Stiffler, Zac... SBI Jobs E Aa Finish update: ☐ All Bookmarks Goodweek Tires, Inc. After extensive research and development, Goodweek Tires, Inc., has recently developed a new tire, the SuperTread, and must decide whether to make the investment necessary to produce and market it. The tire would be ideal for drivers doing a large amount of wet weather and off-road driving in addition to normal freeway usage. The research and development costs so far have totaled about $10 million. The SuperTread would be put on the market beginning this year, and Goodweek expects it to stay on the market for a total of four years. Test marketing costing $5…arrow_forward
- Damerly Company (a Utah employer) wants to give a holiday bonus check of $375 to each employee. As it wants the check amount to be $375, it will need to gross-up the amount of the bonus. Calculate the withholding taxes and the gross amount of the bonus to be made to John Rolen if his cumulative earnings for the year are $46,910. Besides being subject to social security taxes and federal income tax (supplemental rate), a 4.95% Utah income tax must be withheld on supplemental payments.arrow_forwardPlease given correct answer general Accountingarrow_forwardHii ticher please given correct answer general Accountingarrow_forward
- On a particular date, FedEx has a stock price of $89.27 and an EPS of $7.11. Its competitor, UPS, had an EPS of $0.38. What would be the expected price of UPS stock on this date, if estimated using the method of comparables? A) $4.77 B) $7.16 C) $9.54 D) $10.50arrow_forwardHow much will you accumulated after 35 year? General accountingarrow_forwardGiven correct answer general Accountingarrow_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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education