Reference no: EM132691365
ACC 200 Accounting Principles - Emirates College of Technology
Question : The financial statements of XYZ Company appear below:
XYZ COMPANY
Comparative Balance Sheet
December 31,
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Assets 2018 2017
Cash................................................................................................... $ 35,000 $ 40,000
Short-term investments..................................................................... 15,000 60,000
Accounts receivable (net).................................................................. 50,000 30,000
Inventory........................................................................................... 50,000 70,000
Property, plant and equipment (net).................................................. 250,000 300,000
Total assets ................................................................................. $400,000 $500,000
Liabilities and stockholders' equity
Accounts payable.............................................................................. $ 10,000 $ 30,000
Short-term notes payable................................................................... 40,000 90,000
Bonds payable................................................................................... 88,000 160,000
Common stock.................................................................................. 160,000 145,000
Retained earnings.............................................................................. 102,000 75,000
Total liabilities and stockholders' equity..................................... $400,000 $500,000
XYZ COMPANY
Income Statement
For the Year Ended December 31, 2018
Net sales............................................................................................ $360,000
Cost of goods sold............................................................................. 198,000
Gross profit....................................................................................... 162,000
Expenses
Interest expense........................................................................... $12,000
Selling expenses.......................................................................... 40,000
Administrative expenses............................................................. 59,000
Total expenses....................................................................... 111,000
Income before income taxes.............................................................. 51,000
Income tax expense........................................................................... 15,000
Net income........................................................................................ $ 36,000
Additional information:
a. Cash dividends of $9,000 were declared and paid in 2018.
b. Weighted-average number of shares of common stock outstanding during 2018 was 30,000 shares.
c. Market value of common stock on December 31, 2018, was $21 per share.
Instructions:
Using the financial statements and additional information, compute the following ratios for XYZ Company for 2018. Show interpretations also.
1. Current ratio _________.
2. Return on common stockholders' equity _________.
3. Price-earnings ratio _________.
4. Acid-test ratio _________.
5. Receivables turnover _________.
6. Times interest earned _________.
7. Profit margin _________.
8. Days in inventory _________.
9. Payout ratio _________.
10. Return on assets _________.