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Ratio calculation

Please help with these two exercises. Thanks!

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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.

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 ...

Solution Summary

The solution explains how to calculate the required ratios

$2.19