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    Megaframe Computer Company - Balance Sheet

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    Use the following information to answer the next eight questions:
    MEGAFRAME COMPUTER COMPANY
    Balance Sheet
    As of December 31, 2006
    ASSETS
    Cash $ 40,000
    Accounts Receivable 60,000
    Inventory 90,000
    New Plant and Equipment 220,000
    Total Assets $410,000
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Accounts Payable $ 60,000
    Accrued Expenses 40,000

    Long-Term debt 130,000
    Common Stock 60,000
    Paid-In capital 20,000
    Retained earnings 100,000
    Total Liabilities and Stockholders' Equity $410,000
    MEGAFRAME COMPUTER COMPANY
    Income Statement
    For the Year Ended December 31, 2006
    Sales (all on credit) $720,000
    Cost of Goods Sold 500,000
    Gross Profit 220,000
    Sales and Administrative Expense 20,000
    Depreciation 40,000
    Operating Profit 160,000
    Interest Expense 16,000
    Profit before Taxes 144,000
    Taxes (30%) 43,200
    Net Income $100,800

    The firm's return on equity is

    52.8%

    55.6%

    56.0%

    100.0%

    The firm's average collection period is

    30 days.

    25 days.

    14.4 days.

    20 days.

    The firm's receivable turnover is

    4.4x

    10x

    12x

    14.4x

    Megaframe's quick ratio is

    2

    1

    1.6

    10

    Megaframe's current ratio is

    1.9

    1.625

    1.5

    3.2

    What is Megaframe Computer's total asset turnover?

    4.50x

    3.6x

    2x

    1.76x

    The firm's debt to asset ratio is

    56.1%

    47.22%

    33.33%

    none of the above

    Times interest earned for Megaframe Computer is

    4.5x

    9x

    11x

    10x

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    https://brainmass.com/business/financial-statements/174720

    Solution Preview

    Use the following information to answer the next eight questions:
    MEGAFRAME COMPUTER COMPANY
    Balance Sheet
    As of December 31, 2006
    ASSETS
    Cash $ 40,000
    Accounts Receivable 60,000
    Inventory 90,000
    New Plant and Equipment 220,000
    Total Assets $410,000
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Accounts Payable $ 60,000
    Accrued Expenses 40,000

    Long-Term debt 130,000
    Common Stock 60,000
    Paid-In capital 20,000
    Retained earnings 100,000
    Total Liabilities and Stockholders' Equity $410,000
    MEGAFRAME COMPUTER COMPANY
    Income Statement
    For the Year Ended December 31, ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate, the firm's return on equity, the firm's average collection period, the firm's receivable turnover, quick ratio, current ratio, total asset turnover, debt to asset ratio, and times interest earned.

    $2.19

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