Question

Use the following selected data from Business Solutions's income statement for the three months ended March 31, 2020, and from its March 31, 2020, balance sheet to complete the requirements. Computer services revenue Net sales (of goods) Total sales and revenue Cost of goods sold Net income Quick assets Current assets Total assets Current liabi lities Total liabili Total equity $ 27,429 21,771 49,200 13,328 19,125 91,284 95,712 118,200 720 720 117,480 Required: 1. Compute the gross margin ratio (both with and without services revenue) and net profit margin ratio 2. Compute the current ratio and acid-test ratio. 3. Compute the debt ratio and equity ratio. 4. What percent of its assets are current? What percent are long term? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Compute the gross margin ratio (both with and without services revenue) and net profit margin ratio. (Round your percentage answers to 1 decimal place.) With Service Revenue Without Service Revenue Gross margin ratio Net profit margin ratio Re Reg 2 >

Answer 1

resulting profit by Soli The gross margin ratio is a percentage from dividing the amount of companys gross the amount of its net Sales. gross margin ratio = Gross profit Net Sales Gross profit = Sales - cost of goods sold = 21,771 - 13,328 - $8443 = 844 3 = 38.8% 21,771 Gross margin ration (without service revenue Gross profit = 49,200 -13,328 = $35,872 revenue] - 35,872 xos 72.9% 49,200 Gross margin ratio Cwith service Net profit margin: The net profit margin in equal to how much net income or profit is generated as a percentage of revenue. Net profit margin = Net Income Total revenue = 19,125 [Given] 49,200 = 38.9%. withow service Revenue with sewice revenue 72.9% Gross margin ratio 38.8% 38.9% Net profit margin ratio

(2) current ratio is a liquidity ratio that measures a companijs ability to pay short term obligations of those due within one year. current ratio = current Assets current liabil hes = 95,712 = 132.9:1 720 Acid test ratio : This ratio indicates the ability O the firm to meet its short term obligation Immediately. Acid test ratio = Liquid Asset/Quick asset Current liabil'hes - Liarid aset - Current assets - Stock - Prepaid asset. • Stock is Excluded because when it would be sold and at what price it would be sold is not certain. • prepad Expenses que excluded because there cannot be converted esto cash. Acid test ratio = 91,284 720 = 126.8 81 (3) Debt ratio : Is a financial ratio that Indicates the percentage of company's assets that are provided via debt. sett ratio = Total debt xioo Total anset = 720 = 006% or 0.6 il 118,200

Equity ratio : The equity ratio is a timncial yatid indicating the relative proportion of Eauity used to finance a company's asset. Equity ratio - Total Equity total asset 117,480 x 100 - 99.4 . 118, 200 (4) Total Asset = $118,200 wsunt Asset = $ 95,72 fixed Asset - $ 22,488 Total Asset want Axel Percentage of current asset = 95,712 x00 - 80.9% 118200 asset percentage of long term = 100% e current = 100% = 80.9:72 = 1901%

The solution to given question is shown above.