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Ratio Analysis for Kale Company - 6 common ratios

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

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.