Earnings per share (EPS) : The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS). Formula of EPS: EPS = Net income − Preferred dividends Weighted average common shares outstanding Working capital : The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital. Formula of working capital: Working capital = Currrent assets − Current liabilities Current ratio : The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company. Formula of current ratio: Currrent ratio = Currrent assets Current liabilities Debt to assets ratio : This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company. Formula of debt to assets ratio: Debt to assets ratio = Total liabilities Total assets Free cash flow : This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends. Formula of free cash flow: Free cash flow = { Net cash provided by operating activities − Capital expenditures − Dividends } To compute : EPS

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Answer 1

Question

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

(b)

To determine

To compute: Working capital

(c)

To determine

To compute: Current ratio

(d)

To determine

To compute: Debt to assets ratio

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

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The following data relate to direct materials costs for February: Materials cost per yard: standard, $1.98; actual, $2.04 Standard yards per unit: standard, 4.74 yards; actual, 5.14 yards Units of production: 9,300 Calculate the direct materials price variance. a. $558.00 unfavorable b. $2,644.92 favorable c. $2,868.12 favorable d. $2,868.12 unfavorable

At October 1, Bonita company reported owners equity of $70,000. During October, the owner made additional investments of $4,300 and the company earned a net income of $13,900. If the owner's equity at October 31 totals $80,700, what amount of owner's drawings were made during the month?

General Account - At October 1, Bonita company reported owners equity of $70,000. During October, the owner made additional investments of $4,300 and the company earned a net income of $13,900. If the owner's equity at October 31 totals $80,700, what amount of owner's drawings were made during the month?

Answer 2

Question

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

(b)

To determine

To compute: Working capital

(c)

To determine

To compute: Current ratio

(d)

To determine

To compute: Debt to assets ratio

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

(b)

To determine

To compute: Working capital

(c)

To determine

To compute: Current ratio

(d)

To determine

To compute: Debt to assets ratio

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

Expert Solution & Answer

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Answer 4

Question

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

(b)

To determine

To compute: Working capital

(c)

To determine

To compute: Current ratio

(d)

To determine

To compute: Debt to assets ratio

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

Expert Solution & Answer

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See solution

Answer 5

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

(b)

To determine

To compute: Working capital

(c)

To determine

To compute: Current ratio

(d)

To determine

To compute: Debt to assets ratio

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

Answer 6

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

Answer 7

Chapter 2, Problem 2.6AP

(a)

To determine

Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Formula of EPS:

EPS=Net income−Preferred dividendsWeighted average common shares outstanding

Working capital: The measure which evaluates the ability of a company to pay off the short-term debt obligations, by computing the excess of current assets over current liabilities is referred to as working capital.

Formula of working capital:

Working capital=Currrent assets−Current liabilities

Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt obligations which mature within one year or within completion of operating cycle is referred to as current ratio. This ratio assesses the liquidity of a company.

Formula of current ratio:

Currrent ratio=Currrent assetsCurrent liabilities

Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.

Formula of debt to assets ratio:

Debt to assets ratio=Total liabilitiesTotal assets

Free cash flow: This measure evaluates the cash-generating capacity of a company from its operating activities, after paying capital expenditures and dividends.

Formula of free cash flow:

Free cash flow={Net cash provided by operating activities−Capital expenditures−Dividends}

To compute: EPS

Answer 8

(b)

To determine

To compute: Working capital

Answer 9

(b)

To determine

To compute: Working capital

Answer 10

(c)

To determine

To compute: Current ratio

Answer 11

(c)

To determine

To compute: Current ratio

Answer 12

(d)

To determine

To compute: Debt to assets ratio

Answer 13

(d)

To determine

To compute: Debt to assets ratio

Answer 14

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

Answer 15

(e)

To determine

To compute: Free cash flow of Corporation S for 2013 and 2014

Answer 16

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

Answer 17

(f)

To determine

To compute: Discuss the financial position of the company based on the computed ratios.

Answer 18

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Answer 19

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Answer 20

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Answer 21

Ch. 2 - What is meant by the term operating cycle?Ch. 2 - Define current assets. What basis is used for...Ch. 2 - Prob. 3Q Ch. 2 - Prob. 4Q Ch. 2 - Prob. 5Q Ch. 2 - Prob. 6Q Ch. 2 - Prob. 7Q Ch. 2 - Prob. 8Q Ch. 2 - What do these classes of ratios measure? (a)...Ch. 2 - Prob. 10Q

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To compute: Working capital

To compute: Current ratio

To compute: Debt to assets ratio

To compute: Free cash flow of Corporation S for 2013 and 2014

To compute: Discuss the financial position of the company based on the computed ratios.

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Chapter 2 Solutions