Question

In: Accounting

The Company had the following financial data; (10 pts) (show your work) 2017 &nbs

The Company had the following financial data; (10 pts) (show your work)

2017 2016

Current Assets 45,000 Current Assets 25,000

AR 30,000 AR 40,000

Inventory 15,000 Inventory 20,000

Total Assets 120,000 Total Assets 105,000

Current Liabilities 30,000 Current Liabilities 25,000

Long Term Liabilities 90,000 Long Term Liabilities 70,000

Equity 45,000 Equity 5,000

Sales 220,000 Sales 150,000 COGS 90,000 COGS 70,000

Net Income 20,000 Net Income 10,000

Authorized shares 5,000 Authorized shares 5,000

Outstanding shares 2,500 Outstanding shares 2,000

What is the Current ratio for 2017?

What is the Inventory Turnover ratio for 2017?

What is the Debt to Asset ratio for 2017?

What is the Return on Equity ratio for 2017?

What is the EPS in 2017?

Please show work

Expert Solution

Answer to Part 1.

Current Ratio = Current Assets / Current Liabilities
Current Ratio for 2017 = 45,000 / 30,000
Current Ratio for 2017 = 1.50: 1

Answer to Part 2.

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Average Inventory = (15,000 + 20,000) / 2 = $17,500
Inventory Turnover Ratio for 2017 = 90,000 / 17,500
Inventory Turnover Ratio for 2017 = 5.14 times

Answer to Part 3.

Debt to Assets Ratio = Total Debt / Total Assets
Debt to Assets Ratio for 2017 = 90,000 / 120,000
Debt to Assets Ratio for 2017 = 0.75 times

Answer to Part 4.

Return on Equity Ratio = Net Income / Average Equity
Average Equity = (45,000 + 5,000) / 2 = $25,000
Return on Equity Ratio for 2017 = 20,000 / 25,000
Return on Equity Ratio for 2017 = 0.80 times

Answer to Part 5.

Earnings per Share = Net Income / Shares Outstanding
Earnings per Share for 2017 = 20,000 / 2,500
Earnings per Share for 2017 = $8

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