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    Ratio Analysis for Kale Company - 6 common ratios

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    Compute the specific ratios using Kale Company's balance sheet at December 31, 2004.


    Cash 15,000
    Marketable Securites 8,000
    Accounts Receivable 13,000
    Inventory 11,000
    Property and Equipment 170,000
    Accumulated Depreciation (12,500)

    Total Assets 204,500


    Accounts Payable 8,500
    Current Notes Payable 3,500
    Mortgage Payable 4,500
    Bonds Payable 21,500
    Common Stock, $50 par 110,000
    Paid-In Capital in Excess of Par Value 4,000
    Retained Earnings 52,500

    Total Liabilities and Stockholders' Equity 204,500

    Compute each of the following:

    A. Current Ratio
    B. Earning per share
    C. Quick (acid-test) ratio
    D. Return on Investment
    E. Return on Equity
    F. Debt to Equity Ratio

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    Solution Preview

    For some of these calculations, I have assumed this is the first year of business for Kale and the retained earnings amount is the amount of profit for 2004. If not, then B, D and E will need to be recomputed.

    Considering the ROE calculation (E), I ...

    Solution Summary

    The solution shows the calculations for each of the six ratios requested. There are also some comments about the definition differences in ROE and ROI.