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Financial Ratios - Balance Sheet and Income Analysis

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Accounts Payable..............\$ 1,800
Accounts Receivable.......... 5,475
Building.............................40,000
Cash........................... 1,125
Capital Stock................... 20,000
Inventory............................ 3,400
Land............................ 10,000
Long-Term Notes Payable.... 27,000
Market Value of Equity........ 90,000
Net Income.................... 7,000
Retained Earnings (ending).... 5,000
Sales............................. 100,000
Short-Term Notes Payable.......2,300
Stockholders' Equity........... 25,000
Unearned Revenue..................3,900

Use the information in the table above to compute the following ratios:
a. Debt Ratio
b. Current Ratio
c. Return on Sales
d. Asset Turnover
e. Return on Equity
f. Price-Earnings Ratio

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Solution Preview

The first step is to categorize the data in the table into a balance sheet and statement of income.
Enough data is provided to complete a balance sheet, which is given in the attachment (choose word .doc format or .pdf). Notice that the Total Assets (\$60,000) equals the Total Debt + Shareholder's Equity (\$60,000) as they must in a balance sheet.
The balance sheet items must be subcategorized into short term and ...

Solution Summary

The provided data is reformatted into a balance sheet and income statement. Using the reformatted data, the required ratios are calculated. Solution is provided in both Word .doc and pdf formats.

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