18. Return on sales = 11.275 %
Cost of Goods Sold = Beginning inventory + Materials purchased - Ending inventory = $ ( 250,000 + 300,000 - 50,000 ) = $ 500,000
Gross Profit = $ 1,000,000 - $ 500,000 = $ 500,000
Net Income = Gross Profit - SGA - Taxes = $ 500,000 - $ 350,000 - $ 37,250 = $ 112,750
Return on sales = Net Income / Net Sales = $ 112,750 / $ 1,000,000 = 11.275 %
19. Current ratio = Current Assets / Current Liabilities = $ 125,000 / $ 75,000 = 1.67 : 1
20. Quick Ratio = Quick Assets / Current Liabilities = $ ( 125,000 - 60,000 ) / $ 75,000 = 0.87 : 1
The generally acceptable quick ratio is 1 : 1. Yurco's quick ratio is less than 1. Therefore, it does not meet the generally accepted requirement.
Bonus qn. 1 :
ROE = Net Income / Owner's Equity = $ 112,750 / $ 325,000 = 34.69 %
SELECTED INCOME STATEMENT DATA FOR YURGO, Inc. thousands of dollars $1,000,000 bp line Being investory 300,000...