Big Apple, Inc: Calculate ROI, ROE,WC, Current Ratio
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Presented below are the comparative balance sheets of Big Apple, Inc., at December 31, 2009, and 2008. Sales for the year ended December 31, 2009, totaled $890,000.
Assets 2009 2008
Cash $45,000 $49,000
Account receivable 134,000 106,000
Merchandise inventory 201,000 197,000
Total assets $380,000 $352,000
Land 66,000 60,000
Building and equipments 364,000 325,000
Less: Accumulate depreciation (186,000) (157,000)
Total assets $624,000 $580,000
Liabilities
Short-term debt $49,000 $43,000
Accounts payable 92,000 84,000
Other accrued liabilities 64,000 67,000
Total current liabilities $205,000 $194,000
Long term debt 87,000 107,000
Total liabilities $292,000 $301,000
Owners Equity
Common stock, no par, 100,000 shares
authorized, 35,000 and 28,000 shares
issued respectively $102,000 $78,000
Retained earnings:
Beginning balance 201,000 168,00
Net income for the year 74,000 67,000
Dividends for the year (45,000) (34,000)
Ending balance $230,000 $201,000
Total owner's equity $332,000 $279,000
Total liabilities and owners equity $624,000 $580,000
Required:
(a.) Calculate ROI for 2009.
(b.) Calculate ROE for 2009.
(c.) Calculate working capital at December 31, 2009.
(d.) Calculate the current ratio at December 31, 2009.
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Solution Summary
The solution calculates ROI, ROE, working capital, current ratio for Big Apple Inc
Solution Preview
a) ROI = Net Income / Average Total Assets = 74000/((580000+624000)/2) = ...
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