Question

Hi I need help with this question please.

Account information from the comparative financial statements of Hopkins Ltd. for the year ended December 31 appear below:

	2019	2018
Accounts receivable	$129,000	$48,900
Accounts payable	62,000	51,000
Accumulated Depreciation	60,000	30,000
Bonds Payable (due June 30, 2030)	200,000	200,000
Building	280,000	280,000
Cash	95,000	42,000
Common Shares	100,000	100,000
Cost of goods sold	510,000	390,000
Depreciation expense	30,000	30,000
Income tax expense	20,000	18,000
Income tax payable	4,000	3,800
Interest expense	39,000	32,000
Interest payable	7,500	6,000
Inventory	74,000	55,000
Land	120,000	120,000
Notes Payable (due in 6 months)	40,000	0
Office Supplies	5,500	2,900
Operating expenses	275,000	240,000
Prepaid insurance	20,000	16,000
Retained Earnings, January 1st	174,000	64,000
Sales (net credit)	950,000	820,000

REQUIRED: Using the information above (all accounts have normal balance), calculate the following ratios for 2019 indicating whether it is a ratio (x:x), a percentage (to 2 decimal places xx.xx), times (to 2 decimal places), or days (cannot have a part day).

1) Current Ratio
2) Return on common shareholders' equity
3) Receivables turnover
4) Average collection period
5) Times interest earned
6) Profit margin
7) Inventory turnover
8) Days in inventory
9) Return on assets
10) Gross profit margin
11) Debt to total assets
12) Asset turnover

PART B: Using your answers from above, compare 2019 to 2018 and answer the following questions with FAVOURABLE or UNFAVOURABLE.

1) The change in the current ratio from 2019 to 2019 is
2) The change in Times Interest Earned ratio from 2018 to 2019 is
3) The change in Profit Margin from 2018 to 2019 is

Answer 1

Page 1 Caluclate 2019 following . Ratios Current Ratio - Current aggets Current liabilities 328,500 13,500 .. 2.8511 2) Retur A on common share holder's equity - Net Income average stockholders equity 76,000 100.000 : 50.76X100 = 46.4. 3) Receivable turnover Ratio:- * Net credit sale' average receivable 950,000 88,950 - 10.68 times.

Page: 2 4) Average collection period :- Average Receivable - Receivable at beginning + Receivable atending 2 5 46.900 +124,000 = 88,950 Average Collection period = 365 Average Receivable 5365 10.68 - 34117 days 5) Times întrested earned = earning befole In treft tave Interest = 136.000 39,000 = 4146 times. porofit margin =net profit X100 . Sale 76.000 X 100 950000 = 8.13

page:-3 7) Inventély turnover : coft og -goody sold Average Inventory 510.000 G41500 4.90 times Average Pnvenedy - Inventoyat begining +Pnvention ending 55,000+44000 64,500 U days In Inventory - D. Inventily = 365 Pnventory turnover - 365 7.90 = 46.20 times assets : Net Income . . ). Return on average total Offets 76000 612,400 :: -0.124 x 100 = 12.40-1.

page:- year Average total Affets = Aysets of previous Year + Affets OH Current :534900+693,500 619.700 1700 10) Grow porofit margin = Gross profit x 100 sales .: 440,000 y 100 950,000 50.4634X100 46.300) ") debt to total Offet : total liabilites . total afjets 313,500 T. 643,500 - 0.4520 X 100 45.30.4.

page-5 Assets turnover Ratio .Net rates. Average total affas .. 10) cross profit - 950,000 613,400 =1155 times margin = aron profit x 100 sales - 440,000x100 950,000 -0.44631 X 100 :46.314 11) Debt to total assets. .- total Liabilities total Affets = 0.4530 x 100 = 45.20.1. 19) Assets turnover Ratio - Net sales Average total Assets - 950,000 612,400 21:55 times.

Page 6 • 2018 Current Ratio - current Assets Current liabilities - 1641800 60.800 - 2.41,1 Times Intrest Cained = earning betale Intrejt and tak Interest 160,000 32,000 5times. profit margin = niet profit x100 وعلى - 110.000 x 100 820.000 = 13.41.4

pagei-7. | 2019 Comment L Ratio I current palio 2018 271 285 Junfavorable unfavorable Times Interested 5 times 4.46 times unfavorable earned 896. Profit margin / 136414