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    Calculation of Financial Ratios

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    Calculation of Ratios

    The financial information below was taken from the annual financial statements of
    2006 2005
    Current assets $240,000 $212,000
    Current liabilities 80,000 90,000
    Total liabilities 182,000 160,000
    Total assets 520,000 480,000
    Sales 400,000 370,000
    Cost of goods sold 240,000 220,000
    Inventory 100,000 125,000
    Receivables 100,000 60,000
    Net income 50,000 48,000
    Net cash provided by operating activities 30,000 25,000

    Instructions
    Calculate the following ratios for Harris Company for 2006.
    1. Current ratio.
    2. Average collection period.
    3. Current cash debt coverage ratio.
    4. Debt to total assets ratio.
    5. Cash debt coverage ratio.
    6. Return on assets.
    7. Profit margin ratio.
    8. Asset turnover ratio.

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    https://brainmass.com/business/accounting/calculation-financial-ratios-93505

    Solution Preview

    Calculate the following ratios for Harris Company for 2006.
    1. Current ratio.
    = Current assets / Current liabilities = 240,000 / 80,000 = 3

    2. Average collection period.
    = Current Accounts Receivable Balance / Average Daily Sales
    = ...

    Solution Summary

    This Solution demonstrates how to calculate the requested financial ratios for Harris Company.

    $2.19

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