Chapter 2: Accounting and Financial Decision Making
Financial Statement
2.1
(a)
•Current assets = $150,000 + $200,000 + $150,000 + $50,000 + $30,000 =
$580,000
2.2
(a) Working capital = Current assets – Current liabilities;
Working capital requirements = Changes in current assets (except Cash) –
Changes in current liabilities
2.3
(a)
168
ROE 21%
800
A
= =
2.4 (a) Debt ratio = $83,451,000/$207,000,000 = 40.31%
(b) Time–interest–earned ratio: N/A
(c) Current ratio = $73,286,000/$43,658,000 = 1.68 times
2.5
(a) Debt ratio = $34,102,000/$92,358,000 = 36.92%
(b) Time–interest-earned ratio = $50,155,000/$0 = N/A
(c) Current ratio = $32,084,000/$13,568,000 = 2.36 times
(d) Quick ratio = ($32,084,000 – $4,172,000)/$ 13,568,000= 2.06 times
2.6 Given R.C.’s EPS = $8 per share; Cash dividend = $4 per share; Book value
per share = $80; Changes in the retained earnings = $24 million; Total debt =
$240 million; Find debt ratio = total debt/total assets
Net Income $8EPS X
= =
2.7 (b)
2.8 (b)
2.11
• Accounts receivable = DSO × Sales/365 = 40 days ×($20,500)/365 days) =
$2,246.57
2.12
(a) Find Tiger’s accounts receivable.
91.25 $50,000
200,000 / 365
AR
DSO AR= = ⇒=
2.13
(a) Find Fisher’s accounts receivable.
=
1,200 365
�→ =.
ST2.1
Not provided
ST2.2