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Westwood Corporation: Compute Ratios

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42. From the following information, compute the ratios indicated and place the proper numbers in the spaces provided. Assume the average for the year is the same as the ending balances for the balance sheet accounts. Round percentages to one decimal place, and show your work.

Westwood Corporation
Balance Sheet
December 31, 20xx
Assets
Cash $ 15,000
Marketable securities 10,000
Accounts receivable (net) 20,000
Inventory 30,000
Prepaid expenses 8,000
Property, plant, and equipment 117,000
Total assets $200,000

Liabilities and Stockholders' Equity
Current liabilities $ 30,000
Long-term liabilities 50,000
Stockholders' equity 120,000
Total liabilities and stockholders' equity $200,000

Westwood Corporation
Income Statement
For the Year Ended December 31, 20xx
Net sales $160,000
Cost of goods sold 120,000
Gross margin $ 40,000
Operating expenses
Selling and administrative expenses $ 16,000
Interest expense 8,000
Income taxes expense 4,000 28,000
Net income $ 12,000

Westwood had 4,000 shares of common stock issued and outstanding. The market price of common stock at year end was $15.00 per share. Dividends paid in 20xx were $0.60 per share.

Current ratio Asset turnover
Quick ratio Return on assets
Receivable turnover Return on equity
Days' sales uncollected Debt to equity ratio
Inventory turnover Interest coverage ratio
Profit margin Days' inventory on hand
Dividends yield Price/earnings (P/E) ratio

Ans: Current ratio

Asset turnover

Quick ratio

Return on assets

Receivable turnover

Return on equity

Days' sales uncollected

Debt to equity ratio

Inventory turnover

Interest coverage ratio

Profit margin

Days' inventory on hand

Dividends yield

Price/earnings (P/E) ratio

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The expert computes ratios for Westwood Corporations.

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Compute the ratios indicated

42. From the following information, compute the ratios indicated. Assume the average for the year is the same as the ending balances for the balance sheet accounts. Round percentages to one decimal place. Show your work.

Westwood Corporation

Balance Sheet

December 31, 20xx

Assets

Cash $ 15,000

Marketable securities 10,000

Accounts receivable (net) 20,000

Inventory 30,000

Prepaid expenses 8,000

Property, plant, and equipment 117,000

Total assets $200,000

Liabilities and Stockholders' Equity

Current liabilities $ 30,000

Long-term liabilities 50,000

Stockholders' equity 120,000

Total liabilities and stockholders' equity $200,000

Westwood Corporation

Income Statement

For the Year Ended December 31, 20xx

Net sales $160,000

Cost of goods sold 120,000

Gross margin $ 40,000

Operating Expenses

Selling & administrative expenses $16,000

Interest expense 8,000 24,000

Income before income taxes $ 16,000

Income taxes 4,000

Net income $ 12,000

Westwood had 4,000 shares of common stock issued and outstanding. The market price of common stock at year end was $15 per share. Dividends paid in 20xx were $.60 per share.

Calculate the following ratios:

1. Current ratio 6. Asset turnover
2. Quick ratio 7. Return on assets
3. Receivable turnover 8. Return on equity
4. Inventory turnover 9. Debt to equity ratio
5. Profit margin

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