ACC 205 Week 5 Exercise 6 Ratio computation

ACC 205 Week 5 Exercise 6 Ratio computation

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 2,000 2,200
Total Current Assets $5,400 $5,200
Property, Plant, and Equipment
Land $1,700 $ 600
Buildings and Equipment (net) 1,500 1,000
Total Property, Plant, and Equipment $3,200 $1,600
Total Assets $8,600 $6,800
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable $1,800 $1,700
Notes Payable 1,100 1,900
Total Current Liabilities $2,900 $3,600
Long-Term Liabilities
Bonds Payable 4,100 2,100
Total Liabilities $7,000 $5,700
Stockholders’ Equity
Common Stock $ 200 $ 200
Retained Earnings 1,400 900
Total Stockholders’ Equity $1,600 $1,100
Total Liabilities and Stockholders’ Equity $8,600 $6,800

 

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
$ 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:

  1. Quick ratio
  2. Current ratio
  3. Inventory-turnover ratio
  4. Accounts-receivable-turnover ratio
  5. Return-on-assets ratio
  6. Net-profit-margin ratio
  7. Return-on-common-stockholders’ equity
  8. Debt-to-total assets
  9. Number of times that interest is earned
  10. Dividend payout rate

 

 

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