Question

Presented here are the comparative balance sheets of Hames Inc. at December 31, 2020 and 2019. Sales for the year ended December 31, 2020, totaled $680,000 HAMES INC Balance Sheets December 31, 2020 and 2019 2020 2019 $ 23, eee 78, eee 103,000 $204, eee 50,000 125, eee (65,000) $314, eee $ 21,000 72, eee 99,000 $192,000 40,00 110,000 (60, eee) $282,000 Assets Cash Accounts receivable Merchandise inventory Total current assets Land Plant and equipment Less: Accumulated depreciation Total assets Liabilities Short-term debt Accounts payable Other accrued liabilities Total current liabilities Long-term debt Total liabilities Stockholders' Equity Common stock, no par, 180,000 shares authorized 40,000 and 25,000 shares issued, respectively Retained earnings: Beginning balance $ 18, eee 65,6ee 2e, eee $103,60e 22,00 $125,600 $ 17,00 76, eee 18, eee $111, ese 30, eee $141,000 $ 74,000 $ 59, eee $ 82, eee $ 85,00 Prev 3 of 12 Next > to search

Answer 1

In case more than 4 questions are asked, only first 4 are answered:-

1. Return on Investment is the percentage of return earned on the total investment made in the company.

ROI = Net return / Cost of investment.

Cost of investment = Total Stock holder's equity = $141,000.

Net return = 52,400.

ROI = 52,400/141,000 = 37.16%

2. Return on Equity is the percentage of return earned on the equity investment made in the company.

ROE = Net return/Average shareholder's equity

Average shareholder's equity = (59,000+74000)/2 =

Net return = 52,400

ROE = 52,400/ = 78.80 %

3. Working capital is the cash or liquid asset which is required to run or operate the business.

Working capital = Current Assets - Current Liabilities

Current assets = 204,000; Current Liabilities = 103,600

Working capital = 204,000 - 103,600 = $ 100,400

4. Current ratio is the number of times the current assets are higher than the current liabilities of the company. It depicts the liquidity of the company.

Current Ratio = Current assets/current liabilities

Current ratio = 204,000/103,600 = 1.969