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Ratios

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Provide "How to" template to include all formulas for problem 13-23A.

PROBLEM 13-23A - Ratio Analysis

Use the financial statements for Pocco Company from Problem 13-22A to calculate the following ratios for 2006 and 2005.

a. Working capital
b. Current ratio
c. Quick ratio
d. Accounts receivable turnover (beginning receivables at January 1, 2005, were $47,000.)
e. Average number of days to collect accounts receivable
f. Inventory turnover (beginning inventory at January 1, 2005 was $140,000.)
g. Average number of days to sell inventory
h. Debt to assets ratio
i. Debt to equity ratio
j. Times interest earned
k. Plant assets to long-term debt
l. Net margin
m. Asset turnover
n. Return on investment
o. Return on equity
p. Earnings per share
q. Book value per share of common stock
r. Price-earnings ratio (market price per share: 2005, $11.75; 2006, $12.50)
s. Dividend yield on common stock

Financial statement from 13-22A

POCCA COMPANY
Statements of Income and Retained Earnings
For the Years Ended December 31
2006 2005
Revenues
Sales (net) $230,000 $210,000
Other Revenues 8,000 5,000
Total Revenues 238,000 215,000

Expenses
Cost of Good Sold 120,000 103,000
Selling, General, and Administrative Expenses 55,000 50,000
Interest Expense 8,000 7,200
Income Tax Expense 23,000 22,000
Total Expenses 206,000 182,200
Net Earnings (Net Income) 32,000 32,800
Retained Earnings, January 1 108,000 83,000
Less: Preferred Stock Dividends 2,800 2,800
Common Stock Dividends 5,000 5,000
Retained Earnings, December 31 $132,200 $108,000

Attachments

Solution Preview

Please see the attachment. The cell have figures based on the formula below

The formula used are
a. Working capital = Current Assets/Current Liabilities
b. Current ratio = Current Assets/Current Liabilities
c. Quick ratio = (Cash + marketable securities + accounts receivable)/current liabilities
d. Accounts receivable turnover (beginning receivables at January 1, ...

Solution Summary

The solution explains the calculation of various ratios for Pocco Company

$2.19