Financial statement data of Off Road Traveler Magazine include the following ite
ID: 2447550 • Letter: F
Question
Financial statement data of Off Road Traveler Magazine include the following items:
Cash $22,000
Accounts Receivable, Net $78,000
Merchandise Inventory $187,000
Total Assets $640,000
Accounts Payable $102,000
Accrued Liabilities $38,000
Short-term Notes Payable $49,000
Long-term Liabilities $221,000
Net Income $74,000
Common Shares Outstanding $60,000
Current ratio = Total current assets / Total current liabilities
Debt ratio = Total liabilities / Total assets
Earnings per Share = (Net income - Preferred dividends)/Weighted average number of common shares outstanding
1. Now, computeOff Road Traveler's current ratio, debt ratio, and earnings per share. (Round all ratios to two decimal places)
2. Compute the current ratio, debt ratio, and earnings per share after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Purchased merchandise inventory of $49,000 on account. b. Borrowed $121,000 on a long-term note payable. c. Issued $6,000 shares of common stock, receiving cash of $107,000. d. Received cash on account, $8,000.Explanation / Answer
1.23
Ans 2
Ans 1 Current Ratio Total current assets / Total current liabilities (Cash+Accounts Receivable+Merchandise Inventory )/(Accounts Payable +Accrued Liabilities +Short-term Notes Payable ) 1.52 Debt Ratio Total Liabilities/Total Assets 0.64 EPS Net Income/Weighted average no of shares OS1.23
Ans 2
Current Ratio Debt Ratio EPS Remark Ans 2 a 1.41 0.67 - b 2.16 0.70 - c 2.08 0.55 1.17 Assumed issued in the mid of the year d 1.52 0.55 -Related Questions
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