Question

Presented below is financial data for the Forrester company as of year-end 2012 and 2013 1 2012 2013 Current Assets 338,000 355,000 Total Assets 123,000 170,000 Current liabilities/29,000 73,000 Tutal liabilities/72,000 115,000 Net saics 132,000 190,000 Net income 117,500 128,200 calculate Forrester's Corrent ratio debt-to-total-assets ratio,& return on sales ratio. 2012 2013 Corrent ratio Debt-to-assets ratio Return on sales ratio

Answer 1

Answer:

Current Ratio = Current Assets / Current Liabilities

Current Ratio (2012) = $38,000 / $29,000 = 1.31

Current Ratio (2013) = $55,000 / $73,000 = 0.753

Debt-to-total-assets ratio = Total Liabilities(Long term and short term) / Total assets

Debt-to-total-assets ratio (2012) = $72,000 / $123,000 = 0.585

Debt-to-total-assets ratio (2013) = $115,000 / $170,000 = 0.676

Return on sales ratio = Operating Profit / Net Sales

Here, Operating profit is Net income

Return on sales ratio (2012) = $17,500 / $132,000 = 0.1325 or 13.25%

Return on sales ratio (2013) = $28,200 / $190,000 = 0.1484 or 14.84%