Complete the Following ratios for Quixote Consulting. You may use formulas as ne

Question

Complete the Following ratios for Quixote Consulting.
You may use formulas as needed:
A. Liquidity Ratios

1. Current Ratio = Current Assets----------------------Current Liabilities

2. Acid Test Ratio = Cash + A/R + Short term Investments------------------------------------------------CurrentLiabilities

3. Inventory turnover = Cost of Goods Sold------------------------------Average of Inventories

4. Accounts Receivable turnover = Total Sales------------------------------------------Average of Accounts Receivables

B. Solvency Ratios

1. Debt to Total Asset ratio = Total Liabilities-------------------Total Equity

2. Times-interest-earned ratio = Net Income + Interest Expense + Income Tax Expense----------------------------------------------------------------------Interest Expense

C. Profitability Ratios

1. Profit Margin = Net Income---------------Revenue

2. Asset Turnover = Revenue------------Assets

3. Return on Assets = Net Income---------------Total Assets

Quixote Consulting Income Statement For the Month Ended June 30, 2010

Revenues:
Fees Earned $12,425

Expenses:
Salary Expenses 920
Rent Expense 1,500
Supplies Expense 980
Depreciation Expense 500
Insurance Expense 150
Miscellaneous Expense 450
Total Expenses 4,500
Net Income $7,925

Quixote Consulting Statement of Owners Equity For the Month Ended June 30, 2010
Dustin Larkin Capital June 1 $-
Add: Additional Investment 20250
Add: Net Income 7,925
Subtotal 28,175
Less: Drawings 4,500
Dustin Larkin Capital June 30 $23,675

Quixote Consulting Balance Sheet June 30, 2010
Assets:
Current Assets
Cash 8,875
Accounts Receivable 3,450
Supplies 1,020
Prepaid Rent 3,000
Prepaid insurance 1,650
17,995
Noncurrent Assets
Office Equipment 9,300
Less: Accumulated Depreciation 500 8,800
Total Assets $26,795

Liabilities:
Accounts Payable 1,000
Salaries Payable 120
Unearned fees 2,000
Total Liabilities 3,120

Stockholders' Equity:
Dustin Larkin, Capital 23,675
Total Stockholders' Equity 23,675
Total Liabilities &
Stockholders' Equity $26,795

Notes: 1) Some of the ratios do NOT have sufficient data to compute a ratio.     In those ratios, simply type "Insufficient data to Compute".     The objective is to provide you an opportunity to employ critical thinking.     You need to be able to discern whether or not all elements are present. 2) In the ratios that require an "Average" - assume that the BEGINNING Account Balance = - 0-. 3) Remember, .50% is NOT the same as 50%. 4) Use all transactions that include "Sales on Account" as "Net Credit Sales". 5) Be sure to include your formulas in the proper cell. If you simply input an answer, feedback may be limited.     If you include your computations, additional feedback will be possible when an incorrect answer is given. 6) Complete all ratios in all 3 sections - Parts A, B & C. There are 4 ratios in Part A, 2 in Part B, and 3 in Part C.

Explanation / Answer

A.

current ratio=currentasset/current liability

= 17995/3120=5.76

acid test ratio=Cash + A/R + Short term Investments/CurrentLiabilities

13345/3120=4.277

inventory turnover=insufficient data

accounts receivable turnouver=total sales/ avg.AR

12425/3450=3.6

B.

Debt to toatal asset=total liability/total asset

3120/26795=0.1164

times interest earned ratio=EBIT/interest expense

insufficient data

c.

profit margin= net income/revenue

7925/12425=0.6378

Asset turnover=revenue/assets

12425/26795=0.4637

Return on assets=net income/total assets= 7925/26795=0.2958 or 29.58%

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