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Financial Ratios

Based on the information below compute the following ratios for 2008. Please explain each answer.

2008 2007
cash 333,000
A/R (net) 380,000 316,000
Merch Inv 275,000 225,000
marketable Securities 325,000
fixed assets 275,000
Accum depreciation 117,000

A/P 325,000
Unearned rent 18,000
bonds payable 874,000

net sales on act 1,475,000
COGS 750,000

net income 380,000
preferred dividends 35,000
market price per share 60 common
shares common outstand 37,000
common stock dividends 137,500

ratios needed

working capital
acid test ratio
accounts receivable turnover
# days sales in inventory
earnings per share on common stock
dividend per common share of stock
price-earnings ratio

Solution Preview

Working Capital Ratio = Current Assets/Current Liabilities
= (333,000+380,000+275,000+325,000)/(325,000+18,000)
= 1,313,000/343,000
= 3.82

Acid test Ratio = (Cash + Accounts Receivable)/Current Liabilities
= ...

Solution Summary

The solution calculates a number of financial ratios for the scenario given below.

$2.19