Question

second part of the previous question already i have posted

Income statement for Mars for 2018 and 2019 follows:

Particulars	2019 ($)	2018 ($)
Sales	250,000	180,000
Cost of Goods sold	140,000	110,000
Income before taxes	25000	25000
Income Tax expenses	4000	3000
Selling expenses	20,000	19,000
Interest expenses	3,500	4,500

1. Compute the ratios from the given balance sheet extract for 2018.

Assets	$
Cash	30,000
Marketable securities	17,000
Accounts receivables	12,000
Stock	10,000
Land and Building	200,000
Accumulated depreciation	(10,500)
Total Assets
Accounts Payable	36,000
Mortgage payable	35,000
Bonds payable	22,000
Common stock	115,000
Retained earnings	50,500
Total Liabilities and stockholders’ equity

The average number of common stock shares outstanding during 2018 was 1000 shares. Net Income for the year was $30,000 and Net sales $258000 which includes 85000 credit sales. Accounts receivables for 2017 is 13000.

also Compute the following ratios:

1. Earnings Per Share
2. Acid Test Ratio
3. Return on Investment
4. Return on Equity
5. Debt to Equity Ratio
6. Accounts Receivables turnover
7. Net Margin
8. Working Capital

    

and Identify Cash Inflows and Outflows:

No	Item	Type of Cash flow
1	Recovery of working capital
2	Incremental expenses
3	Startup Capital
4	Reduction in Procurement cost

Answer 1

Earnings Per Share = Net Income/ Outstanding Shares	30	per share
Acid Test Ratio = Current Aassets - inventory/ Current Liabilities	1.64	:1			Cash	30,000		Accounts Payable	36,000
Return on Investment = Net Income/Average Total Assets	11.61%				Marketable securities	17,000		Total Current Liabilities	36,000
Return on Equity = Net Income/ Average Shareholderequity	18.13%				Accounts receivables	12,000		Mortgage payable	35,000
Debt to Equity Ratio = Total Liabilities/ Total shareholder equity	56.19%				Stock	10,000		Bonds payable	22,000
Accounts Receivables turnover = Credit Sales/ average Receivables	6.80	Times			Total Current Assets	69,000	Total Liabilities	93,000
Net Margin = Net Income/Net Sales	11.63%				Land and Building	200,000		Shareholders' equity
Working Capital = CA - CL	33,000				Accumulated depreciation	-10,500	189,500	Common stock	115,000
								Retained earnings	50,500	165,500
and Identify Cash Inflows and Outflows:					Total Assets		258,500	Total Liabilities and stockholders’ equity	258,500
Item	Type of Cash flow
Recovery of working capital	Cash inflows
Incremental expenses	Cash outflows
Startup Capital	Cash outflows
Reduction in Procurement cost	Cash inflows