Question

Balance Sheet for the period ending June 30 Assets 2006 2005 Current assets $21,000 $160,000 $300,000 $24,000 $162,000 $315,0

Shareholders equity Common stock $5 per share $100,000 $150,000 Retained earnings $700,000 $1,300,000 $496,000 $1,211,000 Tot

DO NOT WRITE ANSWERS !! PLEASE TYPE ANSWERS SO THEY CAN LOOK SIMILAR TO THIS :

Garth Ltd James Ltd Current Assets 606 548 Current Ratio 1.81 4.33 Current Liabilities 140 302 Current Assets-Inventory 330 2

AGAIN PLEASE TYPE ANSWERS SO THEY CAN LOOK SIMILAR TO THE ABOVE PHOTO !!

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Answer #1
a
2006 2005
Gross Margin percentage (gross profit/Sales)*100 =(840000/2100000)*100 =(710000/1900000)*100
40 37.37
Net Income percentage (net profit/Sales)*100 =(180000/2100000)*100 =(200000/1900000)*100
8.57 10.53
Current ratio Current asset/Current liabilities =490000/200000 =511000/290000
2.45 1.76
Acid test ratio Liquid asset/Current liabilities =(160000+21000)/200000 =(162000+24000)/290000
0.91 0.64
Inventory turnover COGS / Average inventory =1260000/((300000+315000)/2) =1190000/((315000+260000)/2)
4.10 4.14
Debt to equity ratio Debt / Equity =500000/800000 =565000/(150000+496000)
0.63 0.87
Interest cover Net operating income/Interest =180000/30000 =200000/60000
6 3.33
b
Liquidity In 2006, liquidity has improved from 1.76 to 2.45 as shown by Current ratio
Profitability Net profit have improved too in 2006 from 2005
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