Question

please I need help for my project

ACC 112 Project 1B The below represents the comparative financial statements of Kamla Corporation. Kamla Corporation Comparative Income Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Net sales (all on account) $1,178,000 $1,034,000 Expenses: Cost of goods sold $808,000 $710,000 Selling and administrative 209,000 225,000 Interest expense 12,000 14,000 Income tax expense 33,400 23,000 Total expenses $1,062,400 $972,000 Net income $115,600 $62,000

Answer 1

1. Current Ratio :
The current ratio is a liquidity ratio that measures a company's ability to pay its short-term obligations.
It compares a firm's current assets to its current liabilities, and is expressed as follows:
			=	Current Assets / Current Liabilities
			=	$425,500	/	$289,200
			=	1.47
For every dollar of		current Liab.	Company needs to pay , it has $				1.47	of	Current Assets	to utilize.
2. Acid Test Ratio/ Quick Ratio :
The Acid - test ratio is also a liquidity ratio which measures the ability of a company to use its near cash or quick assets
to extinguish or retire its current liabilities immediately.
		Quick Assets	=	Current Assets - Inventory -Prepaid expense
		Acid test ratio	=	Quick Assets/ Current Laibilities
		Here,	=	$38600	+ $34200	+ $171200	/ $ 289,200
			=	244000	/	289200
			=	0.84
For every dollar of		current Liab.	Company needs to pay , it has $				0.84	of	Quick Assets	to utilize.
3.Receivable Turnover Ratio :
The accounts receivable turnover ratio is an accounting measure used to quantify a company's effectiveness
in collecting its receivables or money owed by clients.
			=	Net Credit Sales / average account Receivables
			=	1178000	/	(149400 + 171200)
						2
			=	1178000	/	160300
			=	7.35	times
The Company		Collects	its	Receivables		an average	7.35		times a year/period.
3.Inventory Turnover Ratio :
The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing
cost of goods sold with average inventory for a period.
			=	Cost of Goods sold / Average Inventory
			=	808000	/	(138800 + 181500)
						2
			=	808000	/	160150
			=	5.05	times
The Company		sells	its	inventory		an average	5.05		times a year/period.