Measuring and Evaluating Profitability and Liquidity
A recent balance sheet of Oregon Foods is provided below:
OREGON FOODS BALANCE SHEET DECEMBER 31, 2011 | ||
Assets | ||
Cash |
| $ 6,800 |
Accounts receivable |
| 7,200 |
Office supplies |
| 300 |
Prepaid rent |
| 1,7.00 |
Equipment | $12,000 |
|
Accumulated depreciation: equipment | (4,800) | $ 7,200 |
Total assets |
| $23.200 |
Accounts payable |
| $ 2,200 |
Income taxes payable |
| 1,800 |
Total liabilities |
| $ 4,000 |
Capital stock |
| $10,000 |
Retained earnings |
| 9.200 |
Total stockholders' equity |
| $19.200 |
Total liabilities and stockholders' equity |
| $23,200 |
Other information provided by the company is as follows:
Total revenue for the year ended December 31,2011 | $25,500 |
Total expenses for the year ended December 31,2011 | 20,400 |
Total'stockholders' equity, January 1,2011 | 14,800 |
Compute and discuss briefly the significance of the following measures as they relate to Oregon Foods:
a. Net income percentage in 2011.
b. Return on equity in 2011.
c. Working capital on December 31,2011.
d. Current ratio on December 31,2011.
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