The following is a table of liquidity ratio calculated for an ice-cream company for two years. Analyze the table, then answer the questions below. Chapter 2- Liquidity Ratios 2021 2020 Working Capital | 473,150,109.00 305,962,202.00 Current Assets Current Liabilities 249,660,432.00 232,327,584.00 223,489,677.00 73,634,618.00 Acid Test ( or Quick) ratio Quick Assets 310,797,917.00 187,407,896.00 Quick Assets/ Current Liabilities Current Liabilities 249,660,432.00 232,327,584.00 1.24 0.81 Current Ratio Current Assets 473,150,109.00 305,962,202.00 Current Assets/Current Liabilities Current Liabilities 249,660,432.00 232,327,584.00 1.90 1.32 Average payment Period Accounts Payable 214,491,486.00 185,346,512.00 Operating Revenue /365 Accounts Payable/Average Purchases Per Day 3,411,094.33 3,180,129.39 62.88 58.28 Cash on Hand Days Cash on Hand, Short Term Sources Cash on Hand /(Operating Expenses-Non-cash Expenses)/365 217,283,548.00 129,196,815.00 Operating Expenses 488,512,961.00 463,624,255.00 201.55 119.45 puestions 1. Analyse the above Ratio Analysis- Liquidity Ratios 2. According to the data, is the company seen as profitable? Why? 3. According to the data, does is seem like the company can pay off its debts? Why?

The following is a table of liquidity ratio calculated for an ice-cream company for two years. Analyze the table, then answer the questions below. Chapter 2- Liquidity Ratios 2021 2020 Working Capital | 473,150,109.00 305,962,202.00 Current Assets Current Liabilities 249,660,432.00 232,327,584.00 223,489,677.00 73,634,618.00 Acid Test ( or Quick) ratio Quick Assets 310,797,917.00 187,407,896.00 Quick Assets/ Current Liabilities Current Liabilities 249,660,432.00 232,327,584.00 1.24 0.81 Current Ratio Current Assets 473,150,109.00 305,962,202.00 Current Assets/Current Liabilities Current Liabilities 249,660,432.00 232,327,584.00 1.90 1.32 Average payment Period Accounts Payable 214,491,486.00 185,346,512.00 Operating Revenue /365 Accounts Payable/Average Purchases Per Day 3,411,094.33 3,180,129.39 62.88 58.28 Cash on Hand Days Cash on Hand, Short Term Sources Cash on Hand /(Operating Expenses-Non-cash Expenses)/365 217,283,548.00 129,196,815.00 Operating Expenses 488,512,961.00 463,624,255.00 201.55 119.45 puestions 1. Analyse the above Ratio Analysis- Liquidity Ratios 2. According to the data, is the company seen as profitable? Why? 3. According to the data, does is seem like the company can pay off its debts? Why?

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter24: Analysis Of Financial Statements

Section: Chapter Questions

Problem 2SEA

See similar textbooks

Similar questions

Evaluating Firm Liquidity The following financial information is taken from the balance sheets of the Peter Company and the Paul Company: Paul Peter Current assets $200,000 $50,000 Current liabilities 40,000 20,000 Calculate the current ratio for each company. Round answers to two decimal places, when appropriate. Peter Company Paul Company| Which firm has a higher level of liquidity?
Analyze and compare Zynga, Electronic Arts, and Take-Two Data (in millions) from recent financial statements of Zynga Inc. (ZNGA), Electronic Arts Inc. (EA), and Take-Two Interactive Software, Inc. (TTWO) are as follows: a. Compute the working capital for Year 2 and Year 1 for each company. b. Which company has the largest working capital? c. Compute the current ratio for Year 2 and Year 1 for each company. Round to one decimal place. d. For Year 2, rank the companies from most liquid to least liquid based upon the current ratio.
To get an overall picture of each company's capital structure, it is helpful to look at a the Key Ratios screen and then select the Financial Health tab. Common size balance sheet data are provided over a 10-year period. What, if any, are the major trends that emerge when you're looking at those data? Do those companies tend to have relatively high or relatively low levels of debt? Do these companies have significant levels of current liabilities? Have their capital structures changed over time? Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions. This chapter provides an overview of the effects of leverage and describes the process that firms use to determine their optimal capital structure. The chapter also indicates that capital structures tend to vary across industries and across countries. If you are interested in exploring these differences in more detail, the Morningstar website provides information about the capital structures of each of the companies it follows. The following discussion questions demonstrate how we can use this information to evaluate the capital structures for four restaurant companies: Cheesecake Factory (CAKE), Chipotle Mexican Grill (CMG), Ruby Tuesday (RT), and O'Charley's Inc. (CHUX).
Suppose that you are given the following data for Niles Company : Note: The data and calculations are based on a 365-day year. Cash and equivalents Fixed assets Sales Net income Current liabilities Current ratio DSO ROE The current ratio is equal to assets value of Return on equity (ROE) is to approximately $225,000 $650,000 $2,500,000 $112,500 $240,000 2.5 18.25 12.00% The days sales outstanding (DSO) ratio is equal to accounts receivable balance of Plugging in the relevant values for the current ratio and current liabilities, and then solving yields a current . Adding fixed assets to current assets yields a value of total assets of Recall the following identity: Recall that Total Assets = Total Liabilities and Equity. Plugging in the relevant values for ROE and net income yields a value of total common equity of Mathematically, total liabilities and equity is equal to ▼. Plugging in the relevant values for total liabilities and equity, current liabilities, and equity (calculated…
Chapter 5, page 344 and 349: EA12. 5.3 Using the following Balance Sheet summary information, calculate for the two years presented: A. working capital B. current ratio 12/31/2018 12/31/2019 $76,000 48,000 Current assets $295,000 Current liabilities 163,500 After computing liquidity ratios, comment on the performance of an entity using acceptable standards of liquidity performance
1. If current assets are P270,000 and total assets are P810,000, what percentage of total assets are current assets? a) 3.5 percent b) 30 percent c) 25 percent d) 33 percent 2. Comparing the amount of a balance sheet item in one year to the amount for the same item in a prior year is called a) common-size analysis. c) horizontal analysis. 3. A firm has liabilities of P30,000 and owner's capital of P90,000. The percentage of total liabilities to total assets is b) vertical analysis. d) ratio analysis. a) 25 percent. b) 20 percent. 4. A firm had owner's capital of P150,000 in 2013 and P187,500 in 2013. The increase in owner's capital from 2013 to 2014 is a) 12.5 percent. 5. If long-term liabilities are P300,000 and total assets are P2,100,000, what percentage of total assets are long-term liabilities? a) 7 percent c) 50 percent. d) 75 percent. b) 20 percent. c) 25 percent. d) 125 percent. b) 16.7 percent c) 12.5 percent d) 14.3 percent
Calculate the average life, average age, and asset turnover ratios for Exxon Mobil. Discuss what each ratio tells you in the context of your chosen company. Calculate the accounts receivable turnover ratio and convert that ratio into days. Discuss what each ratio tells you in the context of your chosen company. Assets Fiscal year is January-December. All values USD millions. 2018 2019 Cash & Short Term Investments 3.04B 3.09B Cash Only 3.04B 3.09B Short-Term Investments - - Total Accounts Receivable 24.7B 26.97B Accounts Receivables, Net 19.64B 21.1B Accounts Receivables, Gross 20.04B 21.51B Bad Debt/Doubtful Accounts (400M) (405M) Other Receivables 5.06B 5.87B Inventories 18.96B 18.53B Finished Goods 14.8B 14.01B Work in Progress - - Raw Materials 4.16B 4.52B Progress Payments & Other - - Other Current Assets 1.27B 1.47B…
Calculate the quick assets (in $) and acid test ratio for the given company. Round ratios to the nearest hundredth. Company Current Assets Current Liabilities Cash Marketable Securities Accounts Receivable Quick Assets Acid Test Ratio a personal electronics retail store $14,640 $19,600 $2,890 0 $4,430
Balance Sheet You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $670,000, Accounts receivable = $870,000, Inventory = $570,000, Accrued wages and taxes = $111,000, Accounts payable = $207,000, and Notes payable = $1,070,000. What is Cypress's net working capital? Multiple Choice $1,388,000 O $2,110,000 $722,000 O $3,498,000
Find the following using the data bellow Accounts receivable = 111,100,000 Current assets = 316,500,000 Total assets = 600,000,000 A. Return on assets B. Common equity C .Quick ratio
Suppose that you are given the following data for Niles Company : Note: The data and calculations are based on a 365-day year. Cash and equivalents Fixed assets Sales Net income Current liabilities Current ratio DSO ROE $225,000 $650,000 $2,500,000 $112,500 $240,000 2.5 18.25 12.00%
Table 1 shows a balance sheet for a certain company. All quantities shown are in millions of dollars. What is the company's net working capital (in millions)? Note: Express your answers in strictly numerical terms, and IN million of USDs." Table 1 Balance Sheet (in million of USDs) Assets Liabilities Current Assets Current Liabilities Cash 38.0 Accounts payable 85.0 Accounts receivable 67.0 Notes payable/short-term debt 20.0 Inventories 30.0 Total current assets 135.0 Total current li