Explore BrainMass

Explore BrainMass

    Financial Statement Analysis

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    I have spreadsheets but my calculations are not coming up to the numbers provided.
    Table 1
    Smith Company Balance Sheet

    Assets:
    Cash and marketable securities $300,000
    Accounts receivable 2,215,000
    Inventories 1,837,500
    Prepaid expenses 24,000
    Total current assets $3,286,500
    Fixed assets 2,700,000
    Less: accumulated depreciation 1,087,500
    Net fixed assets $1,612,500
    Total assets $4,899,000
    Liabilities:
    Accounts payable $240,000
    Notes payable 825,000
    Accrued taxes 42,500
    Total current liabilities $1,107,000
    Long-term debt 975,000
    Owner's equity 2,817,000
    Total liabilities and owner's equity $4,899,000
    Net sales (all credit) $6,375,000
    Less: Cost of goods sold 4,312,500
    Selling and administrative expense 1,387,500
    Depreciation expense 135,000
    Interest expense 127,000
    Earnings before taxes $412,500
    Income taxes 225,000
    Net income $187,500
    Common stock dividends $97,500
    Change in retained earnings $90,000

    Based on the information in Table 1, the current ratio is:
    a. 2.97.
    b. 1.46.
    c. 2.11.
    d. 2.23.

    Based on the information in Table 1, the debt ratio is:
    a. 0.70.
    b. 0.20.
    c. 0.74.
    d. 0.42.

    Based on the information in Table 1, the net profit margin is:
    a. 4.61%.
    b. 2.94%.
    c. 1.97%.
    d. 5.33%.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:38 pm ad1c9bdddf
    https://brainmass.com/business/financial-statements/financial-statement-analysis-192349

    Solution Preview

    The formula for the current ratio is current assets / current liabilities.

    Current Assets = 3,286,500
    Current Liabilities = ...

    $2.19

    ADVERTISEMENT