Explore BrainMass

Explore BrainMass

    Company's solvency, liquidity, and profitability

    Not what you're looking for? Search our solutions OR ask your own Custom question.

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

    Using the following ratios, calculate the company's solvency, liquidity, and profitability:
    a) Current ratio
    b) Return on sales
    c) Earnings per share (EPS)
    d) Debt ratio
    e) Price earnings ratio

    The company's annual income statement and balance sheet are attached.

    © BrainMass Inc. brainmass.com December 24, 2021, 4:55 pm ad1c9bdddf


    Solution Preview

    See the attached files.
    a) Current Ratio: Current assets divided by current liabilities. An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is.
    b) Return on Sales: A widely used ratio that detects operational efficiency. This measure provides helpful insight to management about how much profit is ...

    Solution Summary

    The solution calculates the company's solvency, liquidity, and profitability.