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Computation of various ratios from the given financial statements.
The condensed financial statements of Westward Corporation for 2006 are presented below.
Westward Corporation
Balance Sheet
Income Statement
31-Dec-06
For the Year Ended December 31, 2006
Assets
Revenues
2,000,000
Current assets
Expenses
Cash and temporary
Cost of goods sold
1,080,000
investments
30,000
Selling and administrative
Accounts receivable
70,000
expenses
495,000
Inventories
120,000
Interest expense
Total current assets
220,000
Total expenses
1,605,000
Income before income taxes
395,000
equipment (net)
780,000
Income tax expense
140,000
Total assets
1,000,000
Net income
255,000
Liabilities and Stockholders' Equity
Current liabilities
80000
Long-term liabilities
300000
Common stockholders' equity
620000
Total liabilities and
stockholders' equity
1000000
Additional data as of December 31, 2005: Inventory = $100,000; Total assets = $900,000; Common stockholders' equity = $540,000.
Instructions
Compute the following listed ratios for 2006 showing supporting calculations. (a) Current ratio = __________________________________________________________. (b) Debt to total assets = _____________________________________________________. (c) Times interest earned = ___________________________________________________. (d) Inventory turnover = _____________________________________________________. (e) Profit margin ratio = ______________________________________________________. (f) Return on common stockholders' equity = ____________________________________. (g) Return on assets = _______________________________________________________.
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