Purchase Solution

# Accounting Financial Ratios in Balance Sheets

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Financial ratios

Shown below are some key figures from the balance sheets of AA Company for two successive years:

December 31, 2000 December 31, 1999
Total assets (of which 30% are current) \$4,000,000 \$3,000,000
Current liabilities 320,000 400,000
Bonds payable (long term) 1,500,000 1,200,000
Capital stock, \$10 par value 1,000,000 1,000,000
Retained earnings 1,180,000 400,000

Dividends of \$50,000 were declared and paid in 2000. compute the following:

Current ratio at end of 1999 ___________to 1
Current ratio at end of 2000 ____________to 1
Working capital at end of 1999 \$__________
Working capital at end of 2000\$___________
Debt ratio at end of 1999__________%
Debt ratio at end of 2000 __________%
Earnings per share for 2000 \$___________

##### Solution Summary

The accounting financial ratios in balance sheets are found. The total assets and current liabilities are given.

##### Solution Preview

Calculate current assets: 2000: CA=0.3*4,000,000=1,200,000; 1999, CA=0.3*3,000,000=900,000
Current ratio at end of 1999 = current assets /Current liabilities=900,000/400,000= 2.25 to 1
Current ratio at end of 2000 = current assets /Current ...

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