Question

Please show me how to properly do this Multiple Enterprises, Inc. ​ Selected figures from the Balance Sheet and Income Statement of Multiple Enterprises, Inc. are shown below. (Compute answer accurate to two decimal places.) ​ From the Balance Sheet ​ From the Income Statement Cash $ 514,800 ​ Net Sales $1,900,000 Accounts Receivable $ 324,000 ​ Cost of Goods Sold $ 796,000 Merchandise Inventory: ​ ​ Net Income $ 240,000 End of this year $ 498,000 ​ ​ ​ End of last year $ 432,000 ​ ​ ​ Total Current Assets $ 1,336,800 ​ ​ ​ Total Current Liabilities $ 269,200 ​ ​ ​ Total Stockholders' Equity $ 1,292,800 ​ ​ ​

5. Refer to Multiple Enterprises, Inc. Compute the working capital ratio. a. 4.79:1 b. 4.97:1 c. 3.12:1 d. 7.92:1 6. Refer to Multiple Enterprises, Inc. Compute the acid test ratio. a. 3.36:1 b. 4.79:1 c. 3.12:1 d. 4.97:1 7. Refer to Multiple Enterprises, Inc. Compute the inventory turnover rate. a. 1.84 b. 1.62 c. 1.71 d. 2.39 8. Refer to Multiple Enterprises, Inc. Compute the ratio of accounts receivable to net sales. a. 1.35:1 b. 0.17:1 c. 0.41:1 d. 1.12:1

Answer 1

Answer:

5)

Working capital ratio              =     Total Current Assets / Total Current Liabilities            =      $ 1,336,800   / $ 269,200            =       4.97

Working capital ratio    = 4.97 : 1

Option (b) is Correct

6)

Acid -Test Ratio               =    ( Cash + Accounts Receivable ) / Total Current Liabilities               =     ( $ 514,800 + $ 324,000 ) / $ 269,200               =       $ 838,800 / $ 269,200               =       3.12

Acid -Test Ratio    = 3.12 : 1

Option (c ) is Correct

7)

Inventory turnover rate            =   Cost of Goods Sold / Average inventory            =     $ 796,000 / ( $ 498,000 + $ 432,000 ) / 2            =     $ 796,000 / $ 465,000            =      1.71

Inventory turnover rate   = 1.71

Option (c ) is Correct

8)

Accounts receivable to net sales            =   Accounts receivable / Net sales            =     $ 324,000   / $1,900,000            =      0. 17

Accounts receivable to net sales = 0.17 : 1

Option (b ) is Correct