Ratio calculation
Not what you're looking for?
Please help with these two exercises. Thanks!
**********
Exercise 14-7
Bennis Company has the following comparative balance sheet data.
BENNIS COMPANY
Balance Sheet
December 31
2012 2011
Cash $15,000 $30,000
Receivables (net) 70,000 60,000
Inventories 60,000 50,000
Plant assets (net) 200,000 180,000
$345,000 $320,000
Accounts payable $50,000 $60,000
Mortgage payable (15%) 100,000 100,000
Common stock, $10 par 140,000 120,000
Retained earnings 55,000 40,000
$345,000 $320.00
Additional information for 2012:
1. Net income was $25,000.
2. Sales on account were $410,000. Sales returns and allowances were $20,000.
3. Cost of goods sold was $198,000.
4. The allowance for doubtful accounts was $2,500 on December 31, 2012, and $2,000 on December 31, 2011.
Instructions:
Compute the following ratios at December 31, 2012.
(a) Current.
(b) Acid-test.
(c) Receivables turnover.
(d) Inventory turnover.
Exercise 14-9
The income statement for Christensen, Inc. appears below.
CHRISTENSEN, INC.
Income Statement
For the Year Ended December 31, 2011
Sales $400,000
Cost of goods sold 230,000
Gross profit 170,000
Expenses (including $16,000 interest and $24,000 income taxes) 105,000
Net income $65,000
Additional information:
1. The weighted-average common shares outstanding in 2011 were 30,000 shares.
2. The market price of Christensen, Inc. stock was $13 in 2011.
3. Cash dividends of $26,000 were paid, $5,000 of which were to preferred stockholders.
Instructions:
Compute the following ratios for 2011.
(a) Earnings per share.
(b) Price-earnings.
(c) Payout.
(d) Times interest earned.
Purchase this Solution
Solution Summary
The solution explains how to calculate the required ratios
Solution Preview
Problem 1
(a) Current Ratio = Current Assets/Current Liabilities = (15,000 cash + 70,000 receivables + 60,000 inventories)/50,000 accounts payable = 2.9
(b) Acid-test ratio = Quick Assets/Current Liabilities = (15,000 cash + 70,000 receivables)/50,000 accounts ...
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.