2017 2016 Cash Accounts receivable (net) Inventory Land Buildings Accumulated de
ID: 2337316 • Letter: 2
Question
2017 2016 Cash Accounts receivable (net) Inventory Land Buildings Accumulated depreciation-buildings $ 4,100 21,500 10,500 20,100 70,100 14,600 $111,700 $11,800 74,100 3,500 23,500 7,400 25,500 70,100 Total Accounts payable Common stock Retained earnings $119,100 $ 31,200 69,400 18,500 $119,100 Total Wiemers's 2017 income statement included net sales of $102,000, cost of goods sold of $60,900, and net income of $14,900 Compute the following ratios for 2017' (Round Debt to assets ratio to 1 decimal place, e.g. 1.6, or 1.6% and all other answers to 2 decimal places, eg. 1.65, or 1.65% .) (a) Current ratio (b) Acid-test ratio (c) Accounts receivable turnover (d) Inventory turnover (e) Profit margin (f) Asset turnover (g) Return on assets (h) Return on common stockholders' equity (i) Debt to assets ratio $111,700 3.06 :1 2.17 :1 4.53 times 6.80 times times Screenshot saved The screenshot wa OneDrive.Explanation / Answer
Type of Ratio
Formula
Workings
Ratio
Current Ratio
Current Assets/
Current Liabilities
36,100/11,800
3.06 : 1
Acid test ratio
Liquid assets/
Current Liabilities
25,600/11,800
2.17 : 1
Accounts receivable turnover
Net credit sales/
Average Accounts receivable
102000/{(21500+23500)/2}
=102000/22500
4.53 times
Inventory turnover
Cost of goods sold/
Average inventory
60900/ {(10500+7400)/2}
=60900/8950
6.80 times
Profit margin
Net income/
Net Sales
14,900/102,000
14.61%
Asset turnover
Net sales/ Average total assets
102000/{(111700+119100)/2}
= 102000/115400
0.88 times
Return on assets
Net Income/ Average Total Assets
14,900/ 115400
12.91%
Return on common stockholder’s equity
Net income/ Average common stock holder’s equity
14900/{(74100+25800+69400+18500)/2}
=14900/93900
15.87%
Debt to asset ratio
Total debt/ Total assets
11800/111700
10.56%
Type of Ratio
Formula
Workings
Ratio
Current Ratio
Current Assets/
Current Liabilities
36,100/11,800
3.06 : 1
Acid test ratio
Liquid assets/
Current Liabilities
25,600/11,800
2.17 : 1
Accounts receivable turnover
Net credit sales/
Average Accounts receivable
102000/{(21500+23500)/2}
=102000/22500
4.53 times
Inventory turnover
Cost of goods sold/
Average inventory
60900/ {(10500+7400)/2}
=60900/8950
6.80 times
Profit margin
Net income/
Net Sales
14,900/102,000
14.61%
Asset turnover
Net sales/ Average total assets
102000/{(111700+119100)/2}
= 102000/115400
0.88 times
Return on assets
Net Income/ Average Total Assets
14,900/ 115400
12.91%
Return on common stockholder’s equity
Net income/ Average common stock holder’s equity
14900/{(74100+25800+69400+18500)/2}
=14900/93900
15.87%
Debt to asset ratio
Total debt/ Total assets
11800/111700
10.56%
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