Ratios
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Airline Company Balance Sheet
As of December 31, 2003
Assets
Cash........................................................... $ 30,000
Account receivable....................................... 50,000
Inventory..................................................... 80,000
Net plant and equipment............................... 200,000
Total Assets.............................................$ 360,000
Liabilities and Stockholders' Equity
Accounts Payable....................................... $ 50,000
Accrued expenses....................................... 30,000
Long-term debt............................................ 120,000
Common stock............................................. 60,000
Paid-in capital............................................... 20,000
Retained earning........................................... 80,000
Total liabilities and Stockholders' Equity.... $360,000
Airline Company Income Statement
For Year Ended December 31, 2003
Sales (on credit)............................................. $ 720,000
Cost of goods sold.......................................... 500,000
Gross profit....................................................$ 220,000
Sales and administration expense..................... 20,000
Depreciation................................................... 40,000
Operating profit............................................... $ 160,000
Interest expense.............................................. 16,000
Profit before tax.............................................. 144,000
Taxes (50 percent).......................................... 72,000
Net income..................................................... $ 72,000
The firm's average collection period is?
Airline Company's current ratio?
Times interest earned for the company is?
The firm's debt to asset ratio is?
Compute Airline Company's after tax profit margin?
The firm's receivable turnover is?
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Solution Summary
The solution explains the calculation of various ratios
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Current Ratio is calculated by dividing the current assets by current liabilities
Current Ratio = Current Assets /Current Liabilities
Current assets are cash, inventory and receivables = 30,000+50,000+80,000=160,000
Current ...
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