Problem

Computing RatiosA condensed balance sheet for Bradford Corporation prepared at the end of...

Computing Ratios

A condensed balance sheet for Bradford Corporation prepared at the end of the year appears as follows:

Assets

Liabilities&Stockholders' Equity

Cash

$ 105,000

Notes payable (due in 6 months)

$ 40,000

Accounts receivable

145,000

Inventory

270,000

Accounts payable

110,000

Prepaid expenses

60,000

Long-term liabilities

360,000

Plant&equipment (net)

570,000

Capital stock. $5 par

300,000

Other assets

90,000

Retained earnings

430,000

Total

$1,240,000

Total

$1,240,000

During the year the company earned a gross profit of $1,116,000 on sales of $2,950,000. Accounts receivable, inventory, and plant assets remained almost constant in amount throughout the year, so year-end figures may be used rather than averages.

Compute the following:

a. Current ratio.

b. Quick ratio.

c. Working capital.

d. Debt ratio.

e. Accounts receivable turnover (all sales were on credit).

f. Inventory turnover.

g. Book value per share of capital stock.

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