Question

ARID Company

Income Statement

FYE 12/31

Assets					2015		2014
Current assets
	Cash				$       45,000		$       23,000
	Short-term investments				36,000		18,000
	Accounts receivable				94,000		89,000
	Inventory				82,000		68,000
		Total current assets			257,000		198,000
	Plant assets (net)				550,000		560,000
	Total assets				$807,000		$758,000
Liabilities and Stockholders' Equity
Current liabilities
	Accounts payable				140,000		120,000
	Income taxes payable				35,000		38,000
		Total current liabilities			175,000		158,000
Long-term liabilities
	Bonds payable				160,000		170,000
		Total liabilities			335,000		328,000
Stockholders' equity
	Common stock ($5 par)				195,000		185,000
	Retained earnings				277,000		245,000
		Total stockholders' equity			472,000		430,000
Total liabilities and stockholders'					$807,000		$758,000
Additional data:
The common stock recently sold at $20.00 per share

Compute the following ratios for 2015:

(a) Current ratio=

Working Capital=

(b) Acid-test ratio=

(c)Accounts receivable turnover=

Average Collection Period (Average Days to Collect)=

(d) Inventory turnover=

Days in inventory (Average Days to Sell)=

Operating Cycle = Average Days to Sell + Average Days to Collect

'(e ) Profit Margin =

(f) Asset turnover =

(g) Return on Assets =

(h) Return on Common

Stockholders' Equity =

Answer 1

		2015
	Current assets	257,000.00
	Current liabilities	175,000.00
a	Current ratio ( $ 257,000/ $ 175,000)	1.47
	Cash	45,000.00
	Short-term investments	36,000.00
	Accounts receivable	94,000.00
	Quick assets	175,000.00
b	Acid-test ratio ( Quick assets / current liabilities)	1.00
c	Average Accounts receivable ( $ 94,000+$89,000)/2	91,500.00
	Sales revenue details and income statements are not available in the question.
	Without the above information, it is not able to calculate the following ratios;
	a. Accounts receivable turnover
	b. Average Collection Period
	c. Profit Margin
	d. Asset turnover
	e. Return on Assets
	f. Inventory turnover