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Ratio Solved Problem

The document contains several examples of financial ratio calculations using data from income statements, balance sheets, and other financial documents of various companies. Ratios calculated include working capital, acid-test ratio, current ratio, debt ratio, equity ratio, debt-to-equity ratio, profit margin, gross margin, times interest earned, price-earnings ratio, accounts receivable turnover, days' sales uncollected, days' sales in inventory, inventory turnover, average days to sell inventory, receivables turnover, average collection period, asset turnover, return on assets, and cash dividends.

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29 views

Ratio Solved Problem

The document contains several examples of financial ratio calculations using data from income statements, balance sheets, and other financial documents of various companies. Ratios calculated include working capital, acid-test ratio, current ratio, debt ratio, equity ratio, debt-to-equity ratio, profit margin, gross margin, times interest earned, price-earnings ratio, accounts receivable turnover, days' sales uncollected, days' sales in inventory, inventory turnover, average days to sell inventory, receivables turnover, average collection period, asset turnover, return on assets, and cash dividends.

Uploaded by

hohrmpm2
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 6

A corporation reports the following year-end balance sheet data.

Calculate the following ratios:

(a) working capital (b) acid-test ratio (c) current ratio


(d) debt ratio (e) equity ratio (f) debt-to-equity ratio
The comparative income statements for Golden Company are shown below. Calculate the
following ratios for 2012:
(a) profit margin.
(b) gross margin.
(c) times interest earned.

A company reported net income of $78,000 and had 15,000 common shares outstanding
throughout the current year. At year-end, the price per share of the company's stock was $49.40.
What is the company's year-end price-earnings ratio?

Price-earnings ratio = $49.40/$5.20 = 9.5


Feedback: Earnings per share = $78,000/15,000 shares = $5.20 per share`
The following current year information is available from a manufacturing company:

Calculate the company's accounts receivable turnover and its days' sales uncollected.
Selected balances from a company's financial statements are shown below. Calculate the
following ratios for 2012:

(a) accounts receivable turnover


(b) inventory turnover
(c) days' sales uncollected
(d) days' sales in inventory
(d) profit margin.
(e) return on total assets.
McLaren Corporation has net income of $11.44 million and net revenue of $80 million in 2010. Its assets are $14 million at the
beginning of the year and $18 million at the end of the year. What are McLaren’s (a) asset turnover and (b) profit margin?

The following data are from the income statements of Huntsinger Company.

(a) Compute for each year (1) the inventory turnover and (2) the average days to sell the inventory.
(b)What conclusions concerning the management of the inventory can be drawn from these data?

(b) Management should be concerned with the fact that inventory is moving slower in 2011 than it did in 2010. The decrease in
the turnover could be because of poor pricing decisions or because the company is stuck with obsolete inventory.
The following data are taken from the financial statements of Morino Company.

Terms for all sales are 1/10, n/60.

(a) Compute for each year (1) the receivables turnover and (2) the average collection period. At the end of 2009, accounts
receivable (net) was $480,000.
(b) What conclusions about the management of accounts receivable can be drawn from these data?

(b) Marino Company should be pleased with the effectiveness of its credit and collection policies. The
company has decreased the average collection period by 9.6 days and the collection period of
approximately 49 days is well within the 60 days allowed in the credit terms.

Gladow Company has owners’ equity of $400,000 and net income of $66,000. It has a payout ratio of
20% and a rate of return on assets of 15%. How much did Gladow pay in cash dividends, and what were
its average assets?

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