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Calculate: Accounting Finance

Computations: The following financial statements apply to the next six problems?

Robert Manufacturing
Balance Sheet
December 31, XXXX

Cash $ 200
Receivables 245
Inventory 625
Total Current Assets $ 1,070
Net Fixed Assets 1,200

Total Assets $ 2,270
=====

Accounts Payable $ 205
Notes Payable 425
Other Current Liabilities 115
Total Current Liabilities $ 745
Long-term Debt . 420
Total Liabilities $ 1165
Common Equity 1105

Total Liabilities and Capital $2,270
======

Robert Manufacturing
Income Statement
For Year ended December 31, XXXX

Sales $ 2,400
Cost of Goods Sold (1,834)
Gross Profit $ 566
Selling Expenses 175
General and Administrative Expenses 216
Earnings Before Interest and taxes (EBIT) $ 175
Less Interest Expense 35
Earnings Before Taxes (EBT) $ 140
Less Taxes (40%) 56
Net Income $ 84
Earning Per Share $ 8.40
Price $40

Questions:
1. Calculate the current ratio.
2. Calculate the debt ratio.
3. Calculate profit margin on sales
4. Return on total assets.
5. Calculate the Inventory ratio.
6. Calculate the price earnings ratio.

Solution Preview

1. Calculate the current ratio.

Current Ratio = Current Assets/Current Liabilities
Current Assets = 1,070
Current Liabilities = 745
Current Ratio = 1,070/745 = 1.44

2. Calculate the debt ratio.

Debt Ratio = Total Liabilities/Total ...

Solution Summary

This solution explains the calculation of various ratios, including the current ratio, debt ratio, profit margin on sales, return on total assets, Inventory ratio and price earnings ratio. All calculations are included.

$2.19