Question

Chapter 13, Part B of the Continuing Cookie Chronicle: Calculate the following financial ratios using the information from the financial statements below. Note: This part WILL be graded when you submit your assignment to the instructor Note: Do not use the information presented on the Textbook website, it is different from what is required below. You may refer to the information within Chapter 13 (week 6) for assistance in completing this tab. Instructions: Using the financial statements below, compute the following ratios for 2019 only: Current Ratio, Debt to total Assets, Gross Profit Rate, Profit Margin, Return on Assets, and Return on Common Stockholder's Equity. Enter your computations in the yellow boxes following the format in the example.

COOKIE & COFFEE CREATIONS INC. Income Statement For the Year Ended October 31 2020 $485,625 222,694 262,931 2019 $462,500 208,125 254,375 Sales Cost of goods sold Gross profit Operating expenses Salaries & wages expense Depreciation expense Other operating expenses Total operating expenses Income from operations Other expenses Interest expense Loss on sale of computer equipment Total other expenses Income before income tax Income tax expense Net income 147,979 17,600 48,186 213,765 49,166 146,350 9,100 42,925 198,375 56,000 4130 2,500 2,913 46,253 9,251 $37,002 0 56,000 14,000 $42,000

Answer 1

Current Ratio = Current assets / Current liabilities

Current assets = 21760

Current Liabilities = 35480

Current ratio = 21760/35480 = 0.61

Debt to assets ratio = Total debts / Total assets

Total debts = 2170

Total assets = 88160

Debt to equity = 2170 / 88160 = 0.024

Gross Proft Rate = Gross profit / Net Sales

Gross profit = 254375

Net sales = Sales - COGS = 462500 - 208125 = 254375

Gross Profit rate = 254375 / 254375 = 1

Profit margin = Net income / Net Sales

Net Income = 42000

Net sales = 254375

Profit margin = 42000 / 254375 = 0.16

Return on Assets = Net income / average total assets

Net income = 42000

Average total assets = Opening assets + Closing assets / 2 = 116071 + 88160 / 2 = 102116

Return on Assets = 42000 / 102116 = 0.41

Return on Equity = Net income / Shareholder's equity

Net income = 42000

Shareholder's Equity = 25180

Return on Equity = 42000 / 25180 = 1.66