a. Calculate XYZ’s 2013 current and quick ratios based on the projected balance

Question

a. Calculate XYZ’s 2013 current and quick ratios based on the projected balance sheet and income statement data.

b. Calculate the 2013 inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover.

c. Calculate the 2013 debt-to-assets and times-interest-earned ratios.

Analysis of Financial Statements Balance Sheets EXHIBITS: INPUT DATA (XYZ) Table 1 Balance Sheets 2013E 2012 2011 Assets Cash Accounts receivable Inventories Total current assets Gross fixed assets Less: accumulated depreciation Net fixed assets Total assets $ 85,632 878,000 1,716,480 $2,680,112 1,197,160 380,120 $817,040 $3,497,152 $ 7,282 632,160 1,287,360 $1,926,802 1,202,950 263,160 $ 939,790 $2,866,592 $ 57,600 351,200 715,200 $1,124,000 491,000 146,200 $ 344,800 $1,468,800 Liabilities and equity Accounts payable Notes payable Accruals Total current liabilities Long-term bonds Total debt Common stock (100,000 shares) Retained earnings Total common equity Total liabilities and equi $436,800 300,000 408,000 $1,144,800 400,000 $1,544,800 1,721,176 231,176 $1,952,352 $3,497,152 $524,160 636,808 489,600 $1,650,568 723,432 $2,374,000 460,000 32,592 $ 492,592 $2,866,592 $ 145,600 200,000 136,000 $ 481,600 323.432 $ 805,032 460,000 203,768 $ 663,768 $1,468,800

Explanation / Answer

a). Solution :- Year 2013

Current ratio = Total current assets / Total current liabilities.

= 2680112 / 1144800

= 2.34 : 1

Quick ratio = (Cash + Accounts receivable) / Total current liabilities.

= (85632 + 878000) / 1144800

= 963632 / 1144800

= 0.84 : 1

Conclusion :-

c). Solution :- Year 2013

Debt to assets ratio = Total debt / Total assets

= 1544800 / 3497152

= 0.44 (approx).

Conclusion :- Debt to assets ratio =  0.44 (approx).

Note :- In absence of income statement data in the given question, Other ratios like inventory turnover ratio, fixed assets turnover ratio, times interest earned ratio, operating margin, profit margin, total asset turnover, return on equity, return on assets etc., can not be calculated.

Current ratio for Year 2013 2.34 : 1 Quick ratio for Year 2013 0.84 : 1

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