Question

Problem 3 Calculate the following information: 1. Quick ratio 2. Accounts receivable turnover ratio 3. Net return on total assets 4. Total liabilities to total assets ratio 5. Times interest earned ratio 6. Return on sales 7. Return on equity Sales: $750,000 Cash: $50,000 Inventory: $150,000 Common Stock: $100,000 Accounts Payable: $100,000 Prepaid expenses: $30,000 so, sou Long term debt: $200,000 Land and Building: $500,000 Operating Income: $450,000 Taxes: $200,000 Accounts Receivable: $70,000 Retained Earnings: $400,000 Cost of Sales: $300,000 Interest expenses: $150,000 Net Profit after taxes: $100,000 Accrued Expenses: $20,000

Answer 1

ovick Ratio - cash + Account Receivable Corent Liabilities 50000 + 70000 Account Payables & Accored Expenses. 120000 100000+20000 3) Accounts Receivable Turnover Patio net credit sciles Average Account Receivable 750000 70000 10.71 Assumed that and Begining All sales were credit Account Recérvable = 0

net Return on Total Asset Net Income Ang total Assets 100000 (Land & Building+ prepaid Expenses + Accounts Receivable + Inventory looooo (500000 + Soooo+ 150000 + 70000) 100ooo 770000 12.987 Total Assets = 770000 Total Liabilities to assess Ratio 19 Total Liabilities Total Assets (100000 + 200000 + 20000) 770000 - 41.55 %

1 s Time Interest Garned Ratio ЕВт Interest Expense Merating = Net profit & Taxes & Interest Expense. 150000 100000 + 200000+ 150000 150000 = 3 times. (6) Return on Return sales - ( Operating Income Sales u Soooo 250000 = 6%

(7) Retom on Equity Net Income Share holders ewity looooo Trommon Stock + Relained cainings 9100000 Cottosur tout 500000 - 204
note :

As there is no opening balances given average remains same as closing balance