Question

sales were on credit, sel esets, $94.900.com Problem 17-4B Calculation of financial statement ratios Selected year-end financial statements of Overton Corporation follow. (All sales balance sheet amounts at December 31, 2016, were inventory, $17.400; total assere stock. $35,500; and retained earnings. $18.800.) OVERTON CORPORATION Balance Sheet December 31, 2017 OVERTON CORPORATION Income Statement For Year Ended December 31, 2017 $ 1150 330. 2. Sales Cost of goods sold..... Gross profit DIUSS pom...-..- Operating expenses..... Interest expense. Income before taxes..... Income taxes........... Net income............ $315,500 236.100 79,400 49,200 2,200 28,000 4,200 $ 23.800 Assets Cash ........................ Short-term investments ......... Accounts receivable, net ........ Notes receivable (trade)"........ Merchandise inventory.......... Prepaid expenses.............. Plant assets, net............... Total assets................... $ 6,100 6,900 12,100 3.000 13,500 2,000 73,900 $117,500 Liabilities and Equity Accounts payable.. Accrued wages payable.......... Income taxes payable ......... Long-term note payable, secured by mortgage on plant assets. Common stock. $5 par value...... Retained earnings Total liabilities and equity............. 30.000 35.000 35.100 $117.500 * These are short-term notes receivable arising from customer (trade) sales. Check Acid-test ratio, 16 to 1: Inventory turnover, 15.3 Required Compute the following: (1) current ratio. (2) acid-test ratio. (3) days' sales uncollected, (4) inventory turnover. (5) days' sales in inventory. (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on common stockholders qui Round to one decimal place; for part 6, round to two decimals.

Answer 1

Answer: Current ratio : - Total corrend Anals cash & short team lovestments & Accounts receirable net + Nde receimble Croce) + Merchandise Inventory +_ Prepaid expense - 6.100 +6,900 £12,100 + 3.000 13.500 + 2,000 $63.600 Torbal coment Irabilities Accounts payable + Acemed wayen payable those mes payette 11,500 + 3300 € 2600 $.400 Current Assets Current reta evrent liabilities CE $43,600 $+9 400 - Los Times 9.5 times a) Acid test ratio : - - Asele that can be converted into cash within one year cash + short term investments & Accounts receivable, net + Merles receivable (fradel = 6100+ 6.900 + 12 100+ 3.000 1 $ 98, 100

liabilities on alligation due within one year. Account payle & Accrued wayes payable thome fare payable - 4500 + 3300 € 2600 $ 14,100 A And tau $28100 test ratio = $ 17,400 365 365 1.6 finnes |3) dapi Sales Wacolected Accents receiroste Hef annual credit sales $ 12,100 + $ 3.000 $315,500 - 11.5 days a) Inventory turnover Average brandon Beginning Inventary + Ending Inventory $77,400 + 373,500 ___ - $ 55,450 Inventory turnover Cast of goods sold Average (mentory 236100 75650 15.3 times

- 365 a) days sales in Inventory: Arcage Inventory cost dit goeds sed $15,650 $236,100 - 23.9 days (6) debt to equity ratio hिi+ sharehol $50,000 $35,000 = 0.66 fimes # Times botener earned tncome before steret ord fanes नहटन erpene $28.000 +$2200 $2200 = 13.1 fiores A | 8) Profil margin rating to Net Income Sales $ 315,500 7.5 %

9) Total dead! Turnove Average total And Beginning Assets + Ending Anak SU,900 + $ 114,500 $ (06.200 Net sales Total Assed turnover - Average total 315.500 Anets - TOEICO - o times 10) Return on total Anet: Income before canis interest and fores Average total Assets so *2300 $ 106200 = 0.3 times 1. Refrem os commes stakeholder's equites Average common stakeholders equity - Bezinnitang equity + freting Equity 35,500 + $ 55000 7 $ 75,90 7 635,70

_Reduce on commes stakeholder's equity -Mel rome Average common stakeholder's equity $ 2,800 $ 62,200 0. 4 fiores - - Thank you