Liquidity Ratios

Se5. Business appliCation  ▶ Using the following accounts and balances taken  from a year-end balance sheet, compute working capital and the current ratio:

 

 

Accounts Payable	$3,500	Merchandise Inventory	$  6,000
Accounts Receivable	5,000	Notes Payable in Three Years	6,500
Cash	2,000	Property, Plant, and Equipment	20,000
Marketable Securities	1,000	Common Stock	24,000

 

 

 

 

 

 

 

 

 

profitability Ratios

Se6. Business appliCation ▶ Using the following information from a balance sheet and an income statement, compute the (1) profit margin, (2) asset turnover, (3) return on assets, (4) debt to equity ratio, and (5) return on equity. (The previous year’s total assets were $200,000, and stockholders’ equity was $140,000.) (Round to one decimal place.)

 

LO 3

 

Total assets                                        $240,000

Total liabilities                                        60,000

Total stockholders’ equity                   180,000