Question
In: Accounting
Following is the balance sheet of Gibson Company for Year 3: GIBSON COMPANY Balance sheet Assets...
Following is the balance sheet of Gibson Company for Year
3:
| GIBSON COMPANY Balance sheet |
|||
| Assets | |||
| Cash | $ | 15,100 | |
| Marketable securities | 8,300 | ||
| Accounts receivable | 12,680 | ||
| Inventory | 10,800 | ||
| Property and equipment | 172,500 | ||
| Accumulated depreciation | (12,800 | ) | |
| Total assets | $ | 206,580 | |
| Liabilities and Stockholders’ Equity | |||
| Accounts payable | $ | 8,810 | |
| Current notes payable | 3,080 | ||
| Mortgage payable | 4,050 | ||
| Bonds payable | 21,660 | ||
| Common stock | 113,200 | ||
| Retained earnings | 55,780 | ||
| Total liabilities and stockholders’ equity | $ | 206,580 | |
The average number of common stock shares outstanding during Year 3
was 890 shares. Net income for the year was $15,400.
Required
Compute each of the following: (Round your answer to 2
decimal places. For percentages, 0.2345 should be entered as
23.45.)
|
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Solutions
Expert Solution
A. Current Ratio = Current Assets / Current Liabilities
Current Assets = Cash + Marketable Securities + Accounts Receivables + Inventory
Current Assets = 15,100 + 8,300 + 12,680 + 10,800
Current Assets = $ 46,880
Current Liabilities = Accounts Payables + Current Notes Payables
Current Liabilities = 8,810 + 3,080
Current Liabilities = $ 11,890
Current Ratio = 46,880 / 11,890
Current Ratio = 3.94 Times
C. Quick Ratio = Quick Assets / Current Liabilities
Current Liabilities = $ 11,890
Quick Assets = Current Assets - Inventory
Quick Assets = 46,880 - 10,800
Quick Assets = $ 36,080
Quick Ratio = 36,080 / 11,890
Quick Ratio = 3.03 Times
B. Earnings per Share = Net Income / Average Number of Common Stock Shares Outstanding
Earnings per Share = 15,400 / 890
Earnings per Share = $ 17.30 per Share
E. Return on Equity in % = Net Income / Stockholders Equity * 100
Return on Equity in % = 15,400 / 168,980 * 100
Return on Equity = 9.11%
Stockholders Equity = Common Stock + Retained Earnings
F. Debt Equity Ratio = Total Liabilities / Total Stockholders Equity
Total Stockholders Equity = $ 168,980
Total Liabilities = Current Liabilities + Mortgage Payable + Bonds Payable
Total Liabilities = 11,890 + 4,050 + 21,660
Total Liabilities = $ 37,600
Debt Equity Ratio = 168,980 / 37,600
Debt Equity Ratio = 4.49 Times
C. Return on Investment in % = Net Income / Total Assets *100
Net Income = $ 15,400
Total Assets = $ 206,580
Return on Investment = 15,400 / 206,580 * 100
Return on Investment = 7.45%
ekkarill92 answered 1 year agoRelated Solutions
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