ACC 205 week 5 #6 Ratio computation

 

 

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’ Equity

$9,600

 

$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

 

 

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