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Ratio Calculations

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1. Condensed financial data are presented below for the Phoenix Corporation:

2006 2005
Accounts receivable 267,500 230,000
Inventory 312,500 257,500
Total current assets 670,000 565,000
Intangible assets 50,000 60,000
Total assets 825,000 695,000
Current liabilities 252,500 200,000
Long-term liabilities 77,500 75,000
Sales 1,640,000
Cost of goods sold 982,500
Interest expense 10,000
Income tax expense 77,500
Net income 127,500
Cash flow from operations 71,000
Cash flow from investing activities (6,000)
Cash flow from financing activities (62,500)
Tax rate 30%

The quick ratio for 2006 is
a. 1.1 to 1.
b. 1.4 to 1.
d. 2.8 to 1.

2. Condensed financial data are presented below for the Phoenix Corporation:

2006 2005
Accounts receivable 267,500 230,000
Inventory 312,500 257,500
Total current assets 670,000 565,000
Intangible assets 50,000 60,000
Total assets 825,000 695,000
Current liabilities 252,500 200,000
Long-term liabilities 77,500 75,000
Sales 1,640,000
Cost of goods sold 982,500
Interest expense 10,000
Income tax expense 77,500
Net income 127,500
Cash flow from operations 71,000
Cash flow from investing activities (6,000)
Cash flow from financing activities (62,500)
Tax rate 30%

If there is no preferred stock, the financial structure leverage for 2006 is
a. 0.6 times.
c. 1.66 times.
d. 1.80 times.

3. Manero Company included the following information in its annual report:

2006 2005 2004
Sales 178,400 162,500 155,500
Cost of Goods sold 115,000 102,500 100,000
Operating expenses 50,000 50,000 45,000
Net Income 13,400 10,000 10,500

In a common size income statement for 2006, the cost of goods sold are expressed as
a. 64.5%.
b. 100.0%.
d. 130.0%.

4. Hansel Corporation's condensed balance sheets appear below:

(Base Year)
2006 2005 2004
Assets
Current assets 55,000 56,500 70,000
Plant and equipment (net) 495,000 410,000 440,000
Intangible assets (net) 20,000 27,500 40,000
Total assets 570,000 494,000 550,000

Liabilities & Stockholders' Equity
Current liabilities 40,000 35,000 32,500
Long-term liabilities 395,000 310,000 375,000
Stockholders' equity 135,000 149,000 142,500
Total liabilities & equity 570,000 494,000 550,000

In a common size balance sheet for 2004, Total liabilities and equity are expressed as
a. 89.9%.
c. 100.0%.
d. 111.3%.

5. Manero Company included the following information in its annual report:

2006 2005 2004
Sales 178,400 162,500 155,500
Cost of Goods sold 115,000 102,500 100,000
Operating expenses 50,000 50,000 45,000
Net Income 13,400 10,000 10,500

In a trend income statement for 2004, where 2004 is the base year, sales are expressed as
a. 84.4%.
c. 100.0%.
d. 150.5%.

6. Condensed financial data are presented below for the Phoenix Corporation:

2006 2005
Accounts receivable 267,500 230,000
Inventory 312,500 257,500
Total current assets 670,000 565,000
Intangible assets 50,000 60,000
Total assets 825,000 695,000
Current liabilities 252,500 200,000
Long-term liabilities 77,500 75,000
Sales 1,640,000
Cost of goods sold 982,500
Interest expense 10,000
Income tax expense 77,500
Net income 127,500
Cash flow from operations 71,000
Cash flow from investing activities (6,000)
Cash flow from financing activities (62,500)
Tax rate 30%

If the intangible assets in 2006 are $50,000, the long-term debt to tangible assets for 2006 is
a. 10.0%.
b. 10.2%.
d. 42.5%.

7. Condensed financial data are presented below for the Phoenix Corporation:

2006 2005
Accounts receivable 267,500 230,000
Inventory 312,500 257,500
Total current assets 670,000 565,000
Intangible assets 50,000 60,000
Total assets 825,000 695,000
Current liabilities 252,500 200,000
Long-term liabilities 77,500 75,000
Sales 1,640,000
Cost of goods sold 982,500
Interest expense 10,000
Income tax expense 77,500
Net income 127,500
Cash flow from operations 71,000
Cash flow from investing activities (6,000)
Cash flow from financing activities (62,500)
Tax rate 30%

The accounts receivable turnover for 2006 is
a. 2.0 times.
c. 6.6 times.
d. 7.1 times.

8. Refer the same chart in question 7, The days inventory held for 2006 is
a. 96 days.
b. 106 days.
d. 138 days.

9. Refer the same chart in question 7, The operating cash flows to total liabilities for 2006 is
a. 13.4%.
c. 23.4%.
d. 28.1%.

10. Refer the same chart in question 7, The return on assets ratio for 2006 is
a. 16.3%.
c. 17.7%.
d. 18.2%.

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The solution has various multiple choice questions involving ratio calculations

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