Reference no: EM132203918
Consider the following financial statement data:
Balance Sheet
Cash $ 20
Accounts receivable 20
Merchandise inventory 40
Plant, at carrying amount 140
$220
Accounts payable $ 20
Non-current borrowings 60
Common shares (8 shares issued) 80
Retained earnings 60
$220
Income Statement
Sales $100
Cost of goods sold 50
Gross profit 50
Operating expenses 14
Income from operations 36
Less: Interest 6
Income before income taxes 30
Less: Income taxes 10
Net income $ 20
Assume that the average of all balance sheet items is equal to the year-end figure and that all sales are on credit.
a. Calculate the following ratios:
i. Return on total assets (assume interest has been paid)
ii. Return on shareholders' equity
iii. Times interest earned ratio
iv. Earnings per share
v. Number of days of sales in inventory
vi. Accounts receivable collection period
vii. Sales to total assets ratio
viii. Current ratio
ix. Acid-test ratio
x. Debt to shareholders' equity ratio.
b. Which of these ratios are measures of liquidity?
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