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6 December, 08:10

Use the following information to calculate the ratios listed below: Total Assets 650,000 Total Liabilities 300,000 Current Assets 60,000 Current Liabilities 20,000 Net Income 70,000 Shares Outstanding 12,000 Accounts Receivable 55,000 Sales 439,000 Inventory 25,000 Dividends 10,000

Quick Ratio:

Earnings Per Share:

Return on Assets:

Debt/Equity Ratio:

Days Sales in Receivables:

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  1. 6 December, 12:04
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    a. Quick Ratio = 1.75

    b. Earnings Per Share = $5 per share

    c. Return on Assets = 10.77%

    d. Debt/Equity Ratio = 85.71%

    e. Days Sales in Receivables = 46 days

    Explanation:

    a. Quick Ratio

    Quick Ratio = (Current Assets - inventory) / Current Liabilities = (60,000 - 25,000) / 20,000 = 35,000 / 20,000 = 1.75

    b. Earnings Per Share

    Earnings Per Share = (Net Income - Dividends) / Shares Outstanding = (70,000 - 10,000) / 12,000 = 60,000 / 12,000 = $5 per share

    c. Return on Assets

    Return on Assets = Net Income / Total Assets = 70,000 / 650,000 = 0.1077, or 10.77%.

    d. Debt/Equity Ratio

    Shareholder equity = Total Assets - Total Liabilities = 650,000 - 300,000 = 350,000

    Debt/Equity Ratio = Total liabilities / Shareholder equity = 300,000 / 350,000 = 0.8571, or 85.71%.

    e. Days Sales in Receivables

    Days Sales in Receivables = (Accounts Receivable / Sales) * 365 = (55,000 / 439,000) * 365 = 46 days.
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