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    Farr Corporation for 2003: Compute the following listed ratios for 2003 showing supporting calculations...

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    RATIO ANALYSIS

    The condensed financial statements of Farr Corporation for 2003 are presented below.

    Farr Corporation Farr Corporation
    Balance Sheet Income Statement
    December 31, 2003 For the Year Ended December 31, 2003

    Assets Revenues $2,000,000
    Current assets Expenses
    Cash and temporary Cost of goods sold 1,020,000
    investments $ 60,000 Selling and administrative
    Accounts receivable 70,000 expenses 680,000
    Inventories 140,000 Interest expense 50,000
    Total current assets 270,000 Total expenses 1,750,000
    Property, plant, and Income before income taxes 250,000
    equipment (net) 730,000 Income tax expense 100,000
    Total assets $1,000,000 Net income $ 150,000

    Liabilities and Stockholders' Equity
    Current liabilities $ 100,000
    Long-term liabilities 380,000
    Stockholders' equity 520,000
    Total liabilities and
    stockholders' equity $1,000,000

    Additional data as of December 31, 2002: Inventory = $100,000; Total assets = $800,000; Stockholders' equity = $480,000.

    Instructions: Compute the following listed ratios for 2003 showing supporting calculations.

    (a) Current ratio = .

    (b) Debt to total assets ratio = .

    (c) Times interest earned = .

    (d) Inventory turnover = .

    (e) Profit margin = .

    (f) Return on stockholders' equity = .

    (g) Return on assets = .

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    https://brainmass.com/business/financial-ratios/43996

    Solution Preview

    (a) Current ratio = Current assets / Current liabilities = 270,000 / 100,000=2.7

    (b) Debt to total assets ratio = Long-term liabilities / Total ...

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