In: Accounting
1. |
Compute Northtown's current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places. | |
2. |
Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately. | |
a. |
Borrowed $105,000 on a long-term note payable. |
|
b. |
On January 1, Issued $30,000 |
|
c. |
Paid short-term notes payable $24,000. |
|
d. |
Purchased merchandise of $45,000 |
|
e. |
Received cash on account $23,000. |
Cash………………………………………. $ 21,000 Accounts Payable……………. $ 100,000
Short-term investments…………………. 33,000 Accrued liabilities……………….. 31,000
Accounts receivable, net……………….. 86,000 Long-term notes payable……… 166,000
Inventories………………………………. 144,000 Other long-term liabilities…….. 31,000
Prepaid expenses……………………… 3,000 Net income………………….. 94,000
Total assets…………………………….. 672,000 Number of common
Short-term notes payable…………….. 45,000 shares outstanding…………. 48,000
Requirement 1. Compute
Northtown'sNorthtown's
current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places.
Start by determining the formula for each ratio, beginning with the current ratio, followed by the debt ratio, and then earnings per share.
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= |
Current ratio |
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= |
Debt ratio |
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= |
Earnings per share |
Now compute
Northtown'sNorthtown's
current ratio, debt ratio, and earnings per share. (Round all ratios to two decimal places.)
Current ratio |
Debt ratio |
Earnings per share |
|
Requirement 2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction
separately.
(Round all ratios to two decimal places.)
Current ratio |
Debt ratio |
Earnings per share |
|
a. |
b. |
c. |
d. |
e. |
1 | Current Ratio | Debt Ratio | Earning Per Share |
1.63 | 0.56 | 1.96 | |
Current Ratio | Debt Ratio | Earning Per Share | |
a | 2.23 | 0.62 | 1.96 |
b | 3.72 | 0.36 | 1.21 |
c | 1.44 | 0.54 | 1.96 |
d | 1.50 | 0.58 | 1.96 |
e | 1.56 | 0.57 | 1.96 |