114.
The following data were shown in the records of Victoria Company at the end of 2016:
Quick assets
$180,000
Current assets
225,000
Average net receivables
10,000
Average inventory
42,000
Current liabilities
50,000
Net credit sales
120,000
Cost of goods sold
84,000
Assume 365 days in the year
Required:
Calculate each of the following ratios. Round your answers to one decimal place.
A. Quick ratio
B. Current ratio
C. Receivable turnover ratio
D. Inventory turnover ratio
E. Average days to collect receivables
F. Average days to sell inventory
115.
The following data were available for Holiday Company:
Sales revenue, $225,000 (including $75,000 cash sales)
Cost of goods sold, $175,000
Average balance in inventory, $20,000
Average balance in accounts receivable, $20,000
Assume 365 days in the year
Required:
Calculate each of the following ratios. Round your answers to two decimal places.
A. Inventory turnover ratio
B. Average days to sell inventory
C. Receivable turnover ratio
D. Average days to collect receivables
116.
Compete Corporation reported a quick ratio of 1.75, current assets of $50,000, and a current
ratio of 2.
Required:
A. Calculate the total amount of quick assets.
B. What is another name for the quick ratio?
C. Describe what type of assets are considered quick assets and give some examples.
D. How does the quick ratio compare to the current ratio?
117.
The following data were reported by Universe Company at year-end:
Total assets
$525,000
Quick assets
105,000
Noncurrent assets
375,000
Current liabilities
75,000
Long-term liabilities
75,000
Common stock (par $10)
170,000
Total stockholders’ equity
375,000
Required:
Calculate each of the following ratios:
A. Debt-to–equity
B. Current ratio
C. Quick ratio
D. Which of the above ratios, if any, are liquidity ratios?
E. Which of the above ratios, if any, are profitability ratios?
118.
Walkers World Company gathered the following information for 2016:
Total sales revenue (65% on credit)
Cost of goods sold
Sales returns and allowances (on credit)
Accounts receivable at end of 2016
($30,000 increase during 2016)
Allowance for doubtful accounts:
Beginning of 2016
End of 2016
Merchandise inventory at end of 2016
($10,000 decrease during 2016)
Assume 365 days in the year.
Required:
Calculate each of the following ratios. Round all dollar amounts to whole dollars and all other
calculations to two decimal places.
A. Receivable turnover ratio
B. Average days to collect receivables
C. Inventory turnover ratio
D. Average number of days to sell inventory
119.
Indicate the effect of each item on the particular ratio of that row of the schedule. In the last
column of the schedule, place the answer of the effect of the item on the ratio. Use the letter I
for increase in the ratio, D for decrease in the ratio, and N for no effect on the ratio. Each item
is independent of the others.
Ratio
Ratio Value
Before the
Item
Occurred
Item
I, D,
or N
A.
Current ratio
3.0
Borrowed money by issuing bonds that mature at the end of 15
years.
B.
Quick
1.0
Returned damaged inventory to the supplier. The goods were
not yet paid for.
C.
Receivable
turnover
12 times per
year
At the beginning of the current year sales terms were changed
from terms of “net due in 30 days” to “net due in 60 days”.
D.
Earnings per
share
$2.00
Issued a 50% stock dividend.
E.
Current ratio
4.0
Sold a short-term investment at a gain.
F.
Fixed asset
turnover
1.4
Sold a building at a loss.
G.
Net profit
margin
.25
A customer returned goods and received a $1,000 credit on
account. The goods had been sold at a 30% gross profit
percentage.
A.
Current ratio
3.0
Borrowed money by issuing bonds that mature at the end of 15
years.
Quick
1.0
Returned damaged inventory to the supplier. The goods were
C.
120.
Longhorn Company reported the following data at year–end:
Total stockholders’ equity
$200,000
Current liabilities
75,000
Total assets
350,000
Current assets
80,000
Common stock (par $10)
125,000
Required:
Calculate each of the following ratios. Round your answers to two decimal places.
A. Debt-to–equity ratio
B. Current ratio
121.
Carolina Company computed the following ratios for a two-year period:
Ratio
2015
2016
1.
Current ratio
1.3
.6
2.
Return on equity
25%
16%
3.
Earnings quality
1.7
.5
4.
Cash coverage ratio
346
122
5.
Net profit margin
6%
4%
Required:
A. Comment on the trend of each of the ratios from 2015 to 2016. State concerns or possible
implications brought to light by each ratio.
B. State an overall opinion of the company’s near future with suggestions for improvement.
122.
The following financial data are available for Murphy Company:
Operating income
$236,500
Net income
196,300
Earnings per share
2.45
Dividends paid per share
1.25
Average common stockholders’ equity
985,000
Average total assets
1,870,000
Current market price per share
24.50
Book value per share
12.30
Required:
Calculate each of the following ratios. Round your answers to two decimal places.
A. Return on equity
B. Price/earnings ratio
C. Dividend yield
123.
The following data were reported for Favre Company:
Net income
$275,000
Total dividends declared and paid
on common stock
$0.60 per
share
Common stock, par $10
$1,750,000
Market price
$20.00 per
share
Cash flows from operating activities
$280,000
Required:
Calculate each of the following ratios. Round your answers to two decimal places.
A. Dividend yield
B. Price/earnings ratio
C. Earnings quality
124.
Polk Corporation reported the following information related to its common stock (par $10)
outstanding and net income:
Total stockholders’ equity (no preferred
stock)
Current market price per share of
common stock
Dividends declared and paid during 2017
Balance in the common stock account
Net income
Required:
Calculate each of the following ratios. Round your answers to two decimal places.
A. Price/earnings ratio
B. Dividend yield
125.
MNF Corporation gathered the following data at the end of the accounting period, December
31, 2016:
Net income
$60,000
Net sales revenue
$1,200,000
Interest expense
$25,000
Total average liabilities
$200,000
Total average stockholders’ equity
(50,000 shares outstanding)
$300,000
Total dividends declared and paid
during 2016
$22,500
Market price per share of stock at year
end
$9.00
Average income tax rate
40%
Required:
Part 1: Calculate each of the following ratios:
A. Net profit margin
B. Return on equity
C. Earnings per share
D. Dividend yield ratio
E. Price/earnings ratio
F. Return on assets
G. Financial leverage percentage
Part 2: Interpret the financial leverage percentage.