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ACC 205 Week 5 Exercise Assignment 2014 update

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ACC 205 Week 5 Exercise Assignment 2014 update;Week Five Exercise Assignment;Financial Ratios;1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10;Edison;Stagg;Thornton;Cash;$6,000;$5,000;$4,000;Short-term investments;3,000;2,500;2,000;Accounts receivable;2,000;2,500;3,000;Inventory;1,000;2,500;4,000;Prepaid expenses;800;800;800;Accounts payable;200;200;200;Notes payable: short-term;3,100;3,100;3,100;Accrued payables;300;300;300;Long-term liabilities;3,800;3,800;3,800;Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?;2. Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc;20X5;20X4;Net credit sales;$832,000;$760,000;Cost of goods sold;530,000;400,000;Cash, Dec. 31;125,000;110,000;Average Accounts receivable;205,000;156,000;Average Inventory;70,000;50,000;Accounts payable, Dec. 31;115,000;108,000;Instructions;a. Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.;3. Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The com?pany reported the following information for 20X7;Net sales;$1,750,000;Interest expense;120,000;Income tax expense;80,000;Preferred dividends;25,000;Net income;130,000;Average assets;1,200,000;Average common stockholders' equity;500,000;Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.;Does the firm have positive or negative financial leverage? Briefly ex?plain.;4. Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.;20X2;20X1;Current Assets;$86,000;$80,000;Property, Plant, and Equipment (net);99,000;90,000;Intangibles;25,000;50,000;Current Liabilities;40,800;48,000;Long-Term Liabilities;153,000;160,000;Stockholders? Equity;16,200;12,000;Net Sales;500,000;500,000;Cost of Goods Sold;322,500;350,000;Operating Expenses;93,500;85,000

 

Paper#77893 | Written in 18-Jul-2015

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