Define the current ratio and quick ratio

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Reference no: EM13867860

1. What is the Balance Sheet? What does it tell us about an organization?

2. What is the Income Statement? What does it tell us about an organization?

3. What is the Cash Flow Statement? What does it tell us about an organization?4. Using the data from the following Financial Statements, compute:

a. Current ratio:

b. Quick ratio:

c. Profit margin on sales:

d. Return on total assets:

e. Return on equity:

Balance Sheet

 Ajax Corp.


 Acme, Inc.

Cash

$2,255,000


 $67,000

Accounts Receivable

 $565,000


 $1,110,000

 Inventory

 $1,332,000


 $2,441,000





Total Current Assets

$4,152,000


 $3,618,000





Net Property, Plant and Equipment

$369,000


 $1,327,000

Other Assets

 $211,000


 $597,000





Total Assets

 $4,732,000


 $5,542,000





Accounts Payable

 $27,000


 $168,000

Notes Payable Sort Term

 $426,000


 $819,000

Other Short Term Liabilities

 $2,000


 $56,000





Total Current Liabilities

 $455,000


 $1,043,000





Notes Payable Long Term

 $1,222,000


 $943,000





Total Liabilities

 $1,677,000


 $1,986,000





Stockholders' Equity

 $3,055,000


 $3,556,000





Total Liabilities and Stockholders' Equity

 $4,732,000


 $5,542,000

Income Statement

 Ajax Corp.


 Acme, Inc.

Sales

 $32,752,000


 $4,835,000

Cost of Sales

 $28,273,000


$2,966,000





Gross Profit

 $4,479,000


$1,869,000





Selling, General and Administrative Expenses

 $2,541,000


 $912,000





Income before Interest and Taxes

 $1,937,000


 $957,000





Interest Expense

 $129,000


 $88,000





Income before Taxes

 $1,808,000


 $869,000





Taxes

 $723,000


 $280,000





Net Income

 $1,085,000


 $589,000

 

5. What does each of these financial ratios tell us about a company?

a. Current ratio

b. Quick ratio:

c. Profit margin on sales:

d. Return on total assets:

e. Return on equity:

Reference no: EM13867860

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