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6. Ratio computation.
The financial statements of the
Lone Pine Company follow.
LONE
PINE COMPANY
Comparative
Balance Sheets
December 31, 20X2 and 20X1 ($
000 Omitted)
20X2 20X1
Assets
Current Assets
Cash and Short-Term Investments $400 $600
Accounts Receivable (net) 3,000 2,400
Inventories 3,000 2,
300
Total Current Assets $6,400 $5,300
Property, Plant, and Equipment
Land $1,700 $
500
Buildings and Equipment (net) 1,500 1,000
Total Property, Plant, and Equipment $3,
200 $1,500
Total Assets $9,600 $6,800
Liabilities and Stockholders’
Equity
Current Liabilities
Accounts Payable $2,800 $1,700
Notes Payable 1,
100 1,900
Total Current Liabilities $3,900 $3,600
Long-Term Liabilities
Bonds Payable 4,100 2,100
Total Liabilities $8,000 $5,700
Stockholders’ Equity
Common Stock $200 $200
Retained Earnings 1,400 900
Total Stockholders’ Equity $1,600 $1,100
Total Liabilities and Stockholders’ $9,600 $6,800
Equity
LONE PINE COMPANY
Statement of Income and Retained Earnings
For the Year Ending December 31,20X2 ($000 Omitted)
Net
Sales* $36,000
Less:
Cost of Goods Sold $20,000
Selling Expense 6,000
Administrative Expense 4,000
Interest Expense 400
Income Tax Expense 2,000 32,400
Net Income $3,600
Retained Earnings, Jan. 1 900
Ending Retained Earnings $4,500
Cash Dividends Declared and
Paid 3,100
Retained Earnings,
Dec. 31 $1,400
*All sales are on account.
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calculations to two decimal
places when necessary:
a.
Quick ratio
b.
Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders’ equity
h. Debt-to-total assets
i.
Number of times that interest is earned
- published: 04 May 2016
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