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    Ratios, Scattergraph and Net Present Value Computation

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    A corporation has the following balance sheet items for the year ending December 31, 2011:

    Cash $15,000
    Accounts Receivable 20,000
    Inventory 45,000
    Prepaid Expenses 10,000
    Property Plant and Equipment 80,000
    Total Assets $170,000

    Accounts Payables 30,000
    Long Term Notes Payable 70,000
    Stockholders' Equity 70,000
    Total Liabilities and Equity $170,000

    The income statement for the year ending December 31, 2011 is as follows:

    Sales $110,000
    Cost of Goods Sold (50,000)
    Gross Margin $ 60,000
    Selling Expenses (20,000)
    Administrative Expenses (10,000)
    Interest Expenses ( 5,000)
    Net Income $25,000
    Calculate the current ratio
    5.67
    3
    2.67
    1.7

    Calculate the acid test/quick ratio
    1
    2.67
    3
    5.67

    Calculate the debt to equity ratio
    1
    1.43
    .43
    .17

    Calculate the profit margin ratio
    .23
    4.4
    .55
    1.83

    Calculate the times interest earned ratio
    6
    5
    .2
    22

    A corporation is considering the purchase of a new equipment costing $90,000. The projected after-tax annual net income from the equipment is $3,600, after deducting $30,000 depreciation. Assume that revenue is to be received at each year-end, and the machine has a useful life of three years with zero salvage value. Management requires a 12% return on its investments. What is the net present value of this machine? (use tables on next page)
    $60,444
    $80,700
    $(9,300)
    $(88,560)

    What is the estimated fixed costs based upon the scattergraph?

    $300
    $50
    $225
    $175

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    https://brainmass.com/business/financial-accounting-bookkeeping/ratios-scattergraph-net-present-value-computation-629601

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    A corporation has the following balance sheet items for the year ending December 31, 2011:

    Cash $15,000
    Accounts Receivable 20,000
    Inventory 45,000
    Prepaid Expenses 10,000
    Property Plant and Equipment 80,000
    Total Assets $170,000

    Accounts Payables 30,000
    Long Term Notes Payable 70,000
    Stockholders' Equity 70,000
    Total Liabilities and Equity $170,000

    The income statement for the year ending December 31, 2011 is as follows:

    Sales $110,000
    Cost of Goods Sold (50,000)
    Gross Margin $ 60,000
    Selling ...

    Solution Summary

    This solution illustrates how to compute various ratios, the net present value of a project using its net income and depreciation, and the fixed costs based on a scattergraph.

    $2.19