Question

Use the following selected data from Business Solutions’s income statement for the three months ended March 31, 2020, and from its March 31, 2020, balance sheet to complete the requirements.

Computer services revenue	$	27,646
Net sales (of goods)		21,924
Total sales and revenue		49,570
Cost of goods sold		13,078
Net income		18,525
Quick assets		91,160
Current assets		96,032
Total assets		123,312
Current liabilities		940
Total liabilities		940
Total equity		122,372

Required:
1. Compute the gross margin ratio (both with and without services revenue) and net profit margin ratio.
2. Compute the current ratio and acid-test ratio.
3. Compute the debt ratio and equity ratio.
4. What percent of its assets are current? What percent are long term?

Answer 1

1)Gross margin ratio (with service revenue) =

Net sales - cost of goods sold/net sales

= $49570 - $13078/$49570= 73.61 %

  Gross margin ratio (without service revenue )

= $21924 - $13078/$21924 = 40.34%

net profit margin(with service revenue) = net income/sale

= $18525/$49570 = 37.37%

net profit margin (without service revenue) = $18525/$21924 = 84.50%

2) current ratio = current assets/current liabilities

= $96032/940

= 102.16

acid test ratio = quick assets/current liabilities

= $91160/$940 = 96.97

3) debt ratio = total debt/total assets

=$940/$123313 = 0.0076

   Equity ratio = total shareholders equity/ total assets

= $122372/$123313

= 0.992

4) current assets percent = current assets/total assets

=$96032/123312 = 77.87%

Long term assets percent = long term asset/total assets

= ($123312 - $96032)/$123312 = 22.13 %

ALL THE BEST

PLEASE DO SUPPORT US

ANY DOUBT PLEASE COMMENT BELOW

THANK YOU