Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 9.6E
To determine
Concept Introduction:
Quick Ratio: Quick ratio is the ratio of quick assets with current liabilities it tells about the liquidity of the company/ business. Best possible quick ratio is 1:1.
Requirement-1:
To Calculate:
Working capital, current ratio and quick ratio.
To determine
Concept Introduction:
Working Capital: It is the difference between the current assets and the current liabilities of the business. Working capital is the amount which is used by the business to meet its short term expenses.
Current Ratio: Current ratio is the ratio of current assets with current liabilities it tells about the how much company strong to meet its day to day expenses. Best current ratio is 2:1.
Quick Ratio: Quick ratio is the ratio of quick assets with current liabilities it tells about the liquidity of the company/ business. Best possible quick ratio is 1:1.
Requirement-2:
To Indicate:
What Conclusion from above ratios?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Income statement data for Winthrop Company for two recent years ended December 31 are as follows:
Please see the attachment for details:
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place.b. What conclusions can be drawn from the horizontal analysis?
Current Position Analysis
The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years:
Current Year
Previous Year
Current assets:
Cash
Marketable securities
Accounts and notes receivable (net)
Inventories
Prepaid expenses
Total current assets
Current liabilities:
Accounts and notes payable
(short-term)
Accrued liabilities
Total current liabilities
a. Determine for each year (1) the working
Current Year
1. Working capital
2. Current ratio
3. Quick ratio
b. The liquidity of Nilo has
current assets relative to current liabilities.
$690,500
799,500
327,000
1,042,800
537,200.
$3,397,000
$458,200
$579,600
652,100
217,300
673,400
430,600
$2,553,000
$483,000
331,800
207,000
$790,000
$690,000
capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
Previous Year
from the preceding year to the current year. The working capital, current ratio, and quick ratio have all
. Most of these changes are the result of an
in
Instructions
Using the financial statements and additional information, compute the following ratios for the El
Camino Company for 2021. Show all computations.
Computations
1. Current ratio
2. Return on common stockholders' equity
3.
Price-earnings ratio
4.
Inventory turnover
5. Accounts receivable turnover
6.
Times interest earned
7.
Profit margin
8.
Days in inventory
9.
Payout ratio
10. Return on assets
Chapter 9 Solutions
Survey of Accounting (Accounting I)
Ch. 9 - What type of analysis is indicated by the...Ch. 9 - Which of the following measures indicates the...Ch. 9 - Prob. 3SEQCh. 9 - Prob. 4SEQCh. 9 - Prob. 5SEQCh. 9 - That is the difference between horizontal and...Ch. 9 - Prob. 2CDQCh. 9 - Prob. 3CDQCh. 9 - Prob. 4CDQCh. 9 - How would the current and quick ratios of a...
Ch. 9 - For Belzcr Corporation, the working capital at the...Ch. 9 - Prob. 7CDQCh. 9 - Prob. 8CDQCh. 9 - a. Why is it advantageous to have a high inventory...Ch. 9 - Prob. 10CDQCh. 9 - Prob. 11CDQCh. 9 - Prob. 12CDQCh. 9 - Prob. 13CDQCh. 9 - Prob. 14CDQCh. 9 - Prob. 15CDQCh. 9 - Favorable business conditions may bring about...Ch. 9 - Prob. 17CDQCh. 9 - Prob. 9.1ECh. 9 - Vertical analysis of income statement The...Ch. 9 - Common-sized income statement Revenue and expense...Ch. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Current position analysis The bond indenture for...Ch. 9 - Accounts receivable analysis The following data...Ch. 9 - Prob. 9.10ECh. 9 - Inventory analysis The following data were...Ch. 9 - Inventory analysis Costco Wholesale Corporation...Ch. 9 - Ratio of liabilities to stockholders' equity and...Ch. 9 - Prob. 9.14ECh. 9 - Debt ratio, ratio of liabilities to stockholders'...Ch. 9 - Prob. 9.16ECh. 9 - Profitability metrics The following selected data...Ch. 9 - Profitability metrics Macy's, Inc. (M). sells...Ch. 9 - Seven metrics The following data were taken from...Ch. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.22ECh. 9 - Unusual income statement items Assume that the...Ch. 9 - Horizontal analysis for income statement For 20Y3....Ch. 9 - Horizontal analysis for income statement For 20Y3....Ch. 9 - Prob. 9.2.1PCh. 9 - Prob. 9.2.2PCh. 9 - Effect of transactions on current position...Ch. 9 - Effect of transactions on current position...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Prob. 9.4.7PCh. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Prob. 9.4.20PCh. 9 - Trend analysis Critelli Company has provided the...Ch. 9 - Trend analysis Critelli Company has provided the...Ch. 9 - Prob. 9.1CCh. 9 - Prob. 9.2CCh. 9 - Prob. 9.3CCh. 9 - Prob. 9.4.1CCh. 9 - Prob. 9.4.2CCh. 9 - Prob. 9.4.3CCh. 9 - Comprehensive profitability and solvency analysis...Ch. 9 - Comprehensive profitability and solvency analysis...
Knowledge Booster
Similar questions
- Effect of transactions on current position analysis Data pertaining to the current position of Lucroy Industries Inc. follow: Instructions 1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios in parts b through j to one decimal place. 2. List the following captions on a sheet of paper: Compute the working capital, the current ratio, and the quick ratio after each of the following transactions and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given. Round to one decimal place. a. Sold marketable securities at no gain or loss, 500,000. b. Paid accounts payable, 287,500. c. Purchased goods on account, 400,000. d. Paid notes payable, 125,000. e. Declared a cash dividend, 325,000. f. Declared a common stock dividend on common stock, 150,000. g. Borrowed cash from bank on a long-term note, 1,000,000. h. Received cash on account, 75,000. i. Issued additional shares of stock for cash, 2,000,000. j. Paid cash for prepaid expenses, 200,000.arrow_forwardANALY SIS OF PROFITABILITY Based on the financial statement data in Exercise 24-1A, compute the following profitability measures for 20-2 (round all calculations to two decimal places): (a) Profit margin ratio (b) Return on assets (c) Return on common stockholders equity (d) Earnings per share of common stockarrow_forwardVertical analysis compares each item on a financial statement with: a corresponding item on a different statement of the same year. B. a total or key amount on the same statement. an industry average. a total or key amount on the financial statement of the previous period.arrow_forward
- = The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Prime Fish Balance sheet Cash Accounts receivable (net) Inventory Property & equipment (net) Other assets Total assets Current liabilities Long-term debt (interest rate: 15%) Capital stock ($10 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders' equity Income statement Sales revenue (1/2 on credit) Cost of goods sold Operating expenses Net income Other data Per share stock price at end of current year Blue Water $ 42,300 44,500 92,500 159,500 85,300 $ 424,100 $ 92,500 74,100 157,100 30,300 70,100 $ 424,100 $ 427,500 (234,500) (163,600) $ 29,400 $ 23.3 45% $ 19,700 34,900 47,800 416,600 318,000 $ 34,300 $ 837,000 $ 68,500 62,600 525,000 107,300 73,600 $ 837,000 $ 789,000 (401,300) (312,300) $ 75,400 $28 45% Average income tax rate Dividends declared and paid in current year Both companies are in the fish catching and manufacturing business.…arrow_forwardCurrent Position Analysis The following data were taken from the balance sheet of Albertini Company at the end of two recent fiscal years: Previous Year Current assets: Cash Marketable securities Accounts and notes receivable (net) Inventories Prepaid expenses. Total current assets. Current liabilities: Accounts and notes payable (short-term) Accrued liabilities Total current liabilities 1. Working capital 2. Current ratio: Current Year 3. Quick ratio b. The liquidity of Albertini has $356,400 412,700 168,900 1,547,700 797,300 $3,283,000 $388,600 281,400 $670,000 $278,400 313,200 104,400 1,167,500 746,500 $2,610,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. Current Year Previous Year $406,000 174,000 $580,000 from the preceding year to the current year. The working capital, current ratio, and quick ratio have all in current assets relative to current liabilities. Most of these changes are the…arrow_forwardHello! look at the attached images and answee the following points: (a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above. Return on year-end capital employed Net asset turnover Gross profit margin Net profit margin Current ratio Closing inventory holding period Trade receivables’ collection period viii. Trade payables’ payment period Dividend yield Dividend cover (b) Analyse the financial performance and position of Primrose Plc for the year ended 31 December 2021 compared to 31 December 2020. (c) Explain the uses and the general limitations of ratio analysis. Thank you a lot!arrow_forward
- Current Position Analysis The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 20Y9 and December 31, 20Y8: Dec. 31, 20Y9 Dec. 31, 20Y8 Cash $361,500 $268,700 Temporary investments 385,700 294,400 Accounts and notes receivable (net) 354,800 320,900 Inventories 495,900 397,800 Prepaid expenses 374,100 122,200 Total current assets $1,972,000 $1,404,000 Accounts payable $336,400 $364,000 Accrued liabilities 243,600 156,000 Total current liabilities $580,000 $520,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. 20Y9 20Υ8 Working capital $ 2$ Current ratio Quick ratioarrow_forwardEffect of transactions on current position analysis Data pertaining to the current position of Forte Company follow: Instructions 1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios in parts b through j to one decimal place. 2. List the following captions on a sheet of paper: Compute the working capital, the current ratio, and the quick ratio after each of the following transactions and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given. Round to one decimal place. a. Sold marketable securities at no gain or loss, 70,000. b. Paid accounts payable, 125,000. c. Purchased goods on account, 110,000. d. Paid notes payable, 100,000. e. Declared a cash dividend, 150,000. f. Declared a common stock dividend on common stock, 50,000. g. Borrowed cash from bank on a long-term note, 225,000. h. Received cash on account, 125,000. i. Issued additional shares of stock for cash, 600,000. j. Paid cash for prepaid expenses, 10,000.arrow_forwardEffect of transactions on current position analysis Data pertaining to the current position of Newlan Company are as follows: Instructions Compute (a) the working capital, (h) the current ratio, and (c) the quick ratio.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage