Question

In: Accounting

1. An asset turnover ratio of 1.87 for a company indicates that: a.the company has $1.87...

1. An asset turnover ratio of 1.87 for a company indicates that:

a.the company has $1.87 of long-term debt for each dollar of operating revenue earned.

b.the company is generating $1.87 of sales revenue for each dollar of long-term operating assets invested.

c.the company is generating $1.87 of net income for each dollar of retained earnings.

d.the company has $1.87 of current assets for each dollar of fixed assets invested.

2. The following information is available for Amanda Co. for the current year.

Common shares outstanding	150,000
Preferred stock dividend declared and paid	$90,000
Net income	$300,000

Calculate the company's earnings per share.

a.$2.60

b.$1.40

c.$1.10

d.$2.00

3. On July 1, George Co. issued $3,000,000 of 10-year, 8% bonds at par. Interest on the bonds is payable semiannually on December 31 and June 30. As a result of this transaction, net assets of the company:

a.is not effected.

b.decrease by $120,000.

c.increase by $3,000,000.

d.decrease by $240,000.

Expert Solution

1)	Formula for asset turnover ratio = Sales / Long term assets

	Therefore correct option would be.

	b.the company is generating $1.87 of sales revenue for each dollar of long-term operating assets invested.


2)	Earnng per share = (net income - preferred dividend )/ Number of shares outstanding

		=($300000-90000)/150000


		=$1.4

	Correct option:b

3)	Journal Entry
			Debit	Credit
	Cash …..		$ 3,00,000
	Notes payable			$ 3,00,000

	Cash = is an asset
	Notes payable = is a liability

	Net Assets = Assets- Liabilities

	=$300000-300000

	=0

	Correct Option :a

ekkarill92 answered 3 years ago

Company A has an Asset turnover ratio of .531, return on asset ratio of .127, and...

Company A has an Asset turnover ratio of .531, return on asset ratio of .127, and return on equity of .165. What does that tell me about company A? Company B has an Asset turnover ratio of 1.553, return on asset ratio of .012, and return on equity of .07. What does that tell me about company B? Compare Company A to Company B. The industry average has an Asset turnover ratio of .81, return on asset ratio of .113,...

A company has a debt-to-equity ratio of 0.62, an asset turnover ratio of 1.39, and a...

A company has a debt-to-equity ratio of 0.62, an asset turnover ratio of 1.39, and a profit margin of 7.8%. The total equity is $ 672,100. What is the amount of net profit?

Current Ratio: Asset Turnover Ratio: Inventory Turnover Ratio: Days In Sales Inventory Ratio: Gross Margin Ratio:...

Current Ratio: Asset Turnover Ratio: Inventory Turnover Ratio: Days In Sales Inventory Ratio: Gross Margin Ratio: Earning Per Share Ratio: Discuss what each ratio indicates about company performance. What does each ratio “tell” about a company? Interpret the ratios and use the interpretation as a basis to analyze the operational effectiveness .

1. Which of the following generally indicates a positive change? a.The acid-test ratio decreases. b.Earnings per...

1. Which of the following generally indicates a positive change? a.The acid-test ratio decreases. b.Earnings per share decreases. c.The number of days' sales in inventory decreases. d.The debt service coverage decreases. 2. Because of its relationship to dividends and market price, which ratio is important to investors? a.Price/earnings ratio. b.Asset turnover ratio. c.Current ratio. d.Debt-to-equity ratio. 3. Trend analysis is analysis a.in which a statistic is calculated for the relationship between two items on a single financial statement or for...

Compute Financial ratios Current Ratio, Quick Ratio, Reeivables turnover, Inventory turnover, Profit margin, Asset turnover, Return...

Compute Financial ratios Current Ratio, Quick Ratio, Reeivables turnover, Inventory turnover, Profit margin, Asset turnover, Return on assets, Return on equity, Earnings per Share, Price-earnings, Cash Dicidend payot, Debt Ratio, Debt-to-Equity, and Times Interest earned Orange Company Income Statement For the Years Ended December 31 2013 2012 Net sales (all on account) $ 600,000 $ 520,000 Expenses: Cost of Goods Sold $ 415,000 $ 354,000 Selling and administrative $ 120,800 $ 114,600 Interest Expense $ 7,800 $ 6,000 Income Tax...

A firm’s profit margin is 18%, and its asset turnover ratio is .5. It has no...

A firm’s profit margin is 18%, and its asset turnover ratio is .5. It has no debt, has net income of $50 per share, and pays dividends of $35 per share. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Which of the following is a market value ratio ? Total asset turnover ratio Quick Ratio...

Which of the following is a market value ratio ? Total asset turnover ratio Quick Ratio Price-Earnigs ( P/E ) ratio Return on Equity (ROE

A fixed asset turnover ratio of 0.72 means that: A. For every $1 in net fixed...

A fixed asset turnover ratio of 0.72 means that: A. For every $1 in net fixed assets, a firm can generate $0.72 in net income. B. For every $1 in net fixed assets, a firm can generate $0.72 in sales. C. For every $1 in total assets, a firm can generate $0.72 in net income. D. For every $1 in net fixed assets, a firm can borrow $0.72. E. For every $1 in total assets, a firm can generate $0.72...

Determine the asset turnover ratio. Round to one decimal place

A company reports the following:Sales $1,800,000Average total assets 1,125,000Determine the asset turnover ratio. Round to one decimal place.

Determine the asset turnover ratio. Round to one decimal place.

A company reports the following:Sales $4,400,000Average total assets 2,000,000Determine the asset turnover ratio. Round to one decimal place.