ACCNTing Hw. Use the above information to determine the following ratios for 2X1
ID: 2497681 • Letter: A
Question
ACCNTing Hw.
Use the above information to determine the following ratios for 2X13:
a. Quick ratio
b. Average collection period in days
c. Total-debt-to-total-equity
d. Pretax return on assets (ROA)
e. Return on common stockholder's equity (ROE)
The following financial statements are available for Jerry Company: Comparative Income Statements For the Years Ending December 31,2X13 and 2X12 2X132X12 $750 $690 Sales (all credit) Cost of Goods Sold Gross Profit Less: Operating Expenses Operating Income Less: Income lax Expense Net Income 440 400 $310 $290 $90 $ 85 $50$48 220 205 40 37 Comparative Balance Sheets December 31,2X13 and 2X12 2X13 2X12 2X13 2X12 Current Assets: Current Liabilities: Cash Accounts Payable $ 24$ 20 15 18 Total Current Liab. $42 S 53 Long-Term Liabilities8030 Total Liabilities $122 S 83 $20 $15 Taxes Payable Note Payable 11 Accounts Receivable4537 $125 $122 $290 S200 Total Long-Term Assets $130 $ 60 Inventory 60 7 Total Current Assets Long-Term Assets: Equipment Less: Accum. Depr (160) 140 Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Liab. & $40 $40 9359 $133$ 99 Total Assets $255 S182 Stockholders' Equity S255 S182Explanation / Answer
Quick Ratio=Total Current Assets-Inventory-Prepaid Expenses/Current Liabilites
= $125/$42
= 2.98
Average Collection Period In days =Number of working days/Debtors Turnover Ratio
= 365/16.67
= 21.90 Days
Debtors Turnover ratio = Net Credit Sales/Receivables + Notes receivables
= $750/$45
Total Debt to Total Equity=Total Liabilities/Total Share holders Equity
= $122/$133
= .92
Pretax Return on Assets=Pretax Income/Total Assets
= $90/$255
= .35
Return on Stock Holders Equity=Net Income/Common Stock Holders Equity
= $50/$40
= 1.25
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