Question

2016 4. Katy Co's Balance Sheet and Income Statement are given below 2020 220,000 Balance Sheet December 31, 2000 Cash Accounts Receivable, less allowance of $10,000 Inventory, LIFO Total Current Assets Land Buildings and Equipe Les accurated depreciation Total Long-term Assets Total Aucts Accounts Payable Accrued Compensation Total Current Liabilities Long-Term Debt Total Liabilities Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity (120.000) 510.000 15.000 140,000 230.000 380.000 520.000 140.000 220.000 380.000 510.000 2019 Income Statement For the Year Ended December 31, 2020 2020 Net sales 718,500 Cost of goods sold 580.000 Gross profit 138.500 Selling, general, and administrative expenses 71,000 Interest expenses 4,000 Earnings before income taxes 63,500 Income taxes 30,000 Net earnings 33.500 650,500 $20.000 130.500 67,000 3.000 60,500 29,000 31.500 2018 640.000 515.000 125.000 65,000 2.500 57,500 28.000 29.500 Required: Compute the following ratios for 2020: a) Liability to equity ratio b) Interest earned ratio c) Current ratio d) Return on equity e) Return on shareholder's equity

Answer 1

for the related From the giver year 2020 the question given information in the in the question of lation tability to Equity Raho Debt Equity lahor Total labilities Total Equityof shareholders 3 .040,000 3,80000 38844 at 0,368 (od 36.844 - lebt to equity rativ is 0.368 . Et mean. The The debt to equity to 36 habilities are 36% of shareholder equity Anterest earned laho - Earneage before enterest and Tax Total interest enpense a 63,500 - 15.875 4000 Could This ratio indicates how many times a company pay the interest with its before tax income Current Ratio current assets current liabilities 2,20000 4.4 50000 a Scanned with CamScanner

This ratio indicates the compouson of an cogent Assets to codent ompouson of companie bilities, calculated a arr used to measure the liquidity to pay off short team debts | 2 (as Return on equity & | | Net income Total share holdets equity | | 33,500 | 3,89000 8.81%. | | les | Return on shareholder's equity Ner encome Total share holder's quity - 32000 3480000 &8 14 * In the case of a company or corporation, stockholders equity and owner's equity means same, but in case of sole propridorship ince there is no stockholders, equity of the corposetion will be owned by one individual Scanned with CamScanner