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Accounting Principles: Ratio Calculations

Scully Corporation's comparative balance sheets are presented in the attached file. Scully's 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and a net income of $15,000.

Instructions: Compute the following ratios for 2008.
(a) Current ratio.
(b) Acid-test ratio.
(c) Receivables turnover.
(d) Inventory turnover.
(e) Profit margin.
(f) Asset turnover.
(g) Return on assets.
(h) Return on common stockholders' equity.
(i) Debt to total assets ratio.

Show your calculations for each ratio - the details of the data used to calculate.


Solution Preview

Compute the following ratios for 2008.
(a) Current ratio. = Current assets/current liabilities = (4,300+21,200+10,000)/12,370 = 2.87
(b) Acid-test ratio. = (cash + receivables)/current liabilities = ...

Solution Summary

This solution provides an example of how to compute all the required ratios which are common principles used within the field of accounting. All work is shown.