INVESTMENTS-CONNECT PLUS ACCESS
11th Edition
ISBN: 2810022611546
Author: Bodie
Publisher: MCG
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Question
Chapter 19, Problem 11CP
Summary Introduction
To determine: The effect on the current ratio and the asset turnover ratio when company uses cash to dispense note payble.
Introduction:
The current ratio is used to determine the ability of the company to meet its short term obligation while turnover ratio is used to measure the sales per dollar of assets.
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Students have asked these similar questions
If a company has a current ratio of 1.5:1, what effects will the borrowing of cash by
long-term debt and collection of accounts receivable have on the ratio?
Decrease and decrease
) Decrease and no effect
Increase and increase
Increase and no effect
Identify the ratio that is relevant to answering each of the following questions.a. How much net income does the company earn from each dollar of sales?b. Is the company financed primarily by debt or equity?c. How many dollars of sales were generated for each dollar invested in fixed assets?d. How many days, on average, does it take the company to collect on credit sales made tocustomers?e. How much net income does the company earn for each dollar owners have invested in it?f. Does the company have sufficient assets to convert into cash for paying liabilities as theycome due in the upcoming year?
Please Help! I am struggling so much with this chapter.
Instructions:
Determine the following measures for 20Y2, rounding to one decimal place including percentages, except for per-share amounts.
1. Working Capital
2. Current Ratio
3. Quick Ratio
4. Accounts Receivable Turnover
5. Number of days' sales in receivables
6. Inventory Turnover
7. Number of days' sales in inventory
8. Ratio of fixed assets to long-term liabilities
9. Ratio of liabilities to stockholder's equity
10. Times interest earned
11. Asset Turnover
12. Return on Total Assets
13. Return on Stockholder's Equity
14. Return on Common Stock
15. Earnings per share on Common Stock
16. Price-earnings ratio
17. Dividends per share of Common Stock
18. Dividend Yield
Chapter 19 Solutions
INVESTMENTS-CONNECT PLUS ACCESS
Ch. 19 - Prob. 1PSCh. 19 - Prob. 2PSCh. 19 - Prob. 3PSCh. 19 - Prob. 4PSCh. 19 - Prob. 5PSCh. 19 - Prob. 6PSCh. 19 - Prob. 7PSCh. 19 - Prob. 8PSCh. 19 - Prob. 9PSCh. 19 - Prob. 10PS
Ch. 19 - Prob. 11PSCh. 19 - Prob. 12PSCh. 19 - Prob. 13PSCh. 19 - Prob. 14PSCh. 19 - Prob. 15PSCh. 19 - Prob. 16PSCh. 19 - Prob. 1CPCh. 19 - Prob. 2CPCh. 19 - Prob. 3CPCh. 19 - Prob. 4CPCh. 19 - Prob. 5CPCh. 19 - Prob. 6CPCh. 19 - Prob. 7CPCh. 19 - Prob. 8CPCh. 19 - Prob. 9CPCh. 19 - Prob. 10CPCh. 19 - Prob. 11CPCh. 19 - Prob. 12CPCh. 19 - Prob. 13CP
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- What relationship exists between the average collection period and accounts receivable turnover? Select one: a. There is a direct and proportional relationship. b. Both ratios are expressed in number of days. c. As average collection period increases (decreases) the accounts receivable turnover decreases (increases). d. Both ratios are expressed in number of times receivables are collected per year.arrow_forwardTabor Company has just prepared the following comparative annual financial statements for the current year: TABOR COMPANY Comparative Income Statement For the Years Ended December 31 Sales revenue (one-half on credit) Cost of goods sold. Gross profit Expenses (including $7,200 interest expense each year). Pretax income Income tax expense (30%) Net income Assets Cash Accounts receivable Inventory Property & equipment (net) Total assets Liabilities Accounts payable Income taxes payable Note payable, long-term Stockholders' equity TABOR COMPANY Comparative Balance Sheet At December 31 Capital stock ($5 par value) Retained earnings Total liabilities and stockholders' equity Current Year Prior Year $ 198,000 $ 257,400 93,600 124,800 132,600 96,200 36,400 10,920 $ 25,480 104,400 72,000 32,400 9,720 $ 22,680 Current Year $ 51,100 61,000 28,200 103,000 $ 243,300 $ 43,400 2,600 56,000 98,000 43,300 $ 243,300 Prior Year $ 39,600 40,000 44,400 121,000 $ 245,000 $ 46,200 1,300 56,000 106,000…arrow_forwardPlease Help! I am struggling so much with this chapter. Instructions: Determine the following measures for 20Y2, rounding to one decimal place including percentages, except for per-share amounts. May I have help with the sub-parts below please (4-18)? 4. Accounts Receivable Turnover 5. Number of days' sales in receivables 6. Inventory Turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholder's equity 10. Times interest earned 11. Asset Turnover 12. Return on Total Assets 13. Return on Stockholder's Equity 14. Return on Common Stock 15. Earnings per share on Common Stock 16. Price-earnings ratio 17. Dividends per share of Common Stock 18. Dividend Yieldarrow_forward
- Which of the following would most likely signal that a company may be using aggressiveaccrual accounting policies to shift current expenses to later periods? Over the last fi veyear period, the ratio of cash fl ow to net income has:A . increased each year.B . decreased each year.C . fl uctuated from year to year.arrow_forwardCalculate ratios related to how quickly the company pays its trade debt and how quickly it collects from its customers. These are known as Accounts Payable (AP) Turnover and Accounts Receivable (AR) Turnover. The formula for AP Turnover is: Cost of Goods Sold/average accounts payable. The formula for AR Turnover is: credit sales/average accounts receivable. Calculate the AP and AR Turnover for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?arrow_forwardA firm has $ 1.2 million in current assets and $ 1 million in current liabilities. If the company uses $ 0.5 million of cash to pay part of its accounts payable, what will happen to the “current ratio”?arrow_forward
- Following is some financial information of 250R Corp: 250 CORP Statement of Income For the years ended December 31, 2020 and 2021 Year Ended 31.12.2021 Sales Revenues Cost of Goods Sold Gross Margin Salaries expense Depreciation expense Interest expense Net income Long-term borrowings Accounts receivable Property, plant & equipment (PPE): Cost Accumulated Depreciation $750,000 (300,000) $450,000 (75,000) (70,000) (30,000) $275,000 Some Selected Balance Sheet Data As at 31.12.2021 $300.000 $525,000 $350,000 210,000 Year Ended 31.12.2020 $500,000 (200,000) $300,000 (50,000) (70,000) (30,000) $150,000 As at 31.12.2020 $300.000 $250.000 $350,000 140,000arrow_forwardGet answerarrow_forwardIf you are told that LSJ Company turns its accounts receivable over every 33 days…this would represent an example of what type of analysis: a. Vertical Analysis b. Horizontal Analysis c. Ratio Analysisarrow_forward
- How do I calculae the times interest earned ratio?arrow_forwardAccounts receivable turnover is 4. What is the average collection period assuming annual data are used? What is the average collection period assuming quarterly data are used?arrow_forwardWhat does the total assets turnover ratio measure? How well fixed assets are utilized during a year. The amount of sales each dollar of assets generates. The length of time it takes before a firm completely replaces all assets. How often a firm must replenish its current assets.arrow_forward
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