Compute the following: .(1) current ratio, (2) acid-test ratio, (3) days' sales uncollected, (4) inventory turnover, (5) days' s

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Compute the following: .(1) current ratio, (2) acid-test ratio, (3) days' sales uncollected, (4) inventory turnover, (5) days' s

ales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on common stockholders' equity.

Business

1 answer:

rusak2 [61] · Answer 1 · 2022-03-26T06:28:05+03:00

Answer:

Current ratio: relationship between short-term assets and short-term liabilities

$\frac{current \: assets}{current \: liaiblities}$

acid-test ratio it removes the inventory from the above calculation to check the presure to sale from the firm

$\frac{current \: assets - inventory}{current \: liaiblities}$

(3)

$\frac{365}{AR \: TO} = $Sales period$

We first, solve for the accounts receivables turnover which is the times we collect the receivables and then, we divide over the days in a year to know the days outstanding

(4)

$\frac{COGS}{Average Inventory} = $Inventory Turnover$

To calculate the times the inventory was sold during the period

(5)

$\frac{365}{Inventory \: TO} = $Sales period$

We first, solve for the inventory turnover which is the times we sale the goods and then, we divide over the days in a year to know the days it takes to leave the inventory

(6) $\frac{Liabilities}{Equity} = $Debt-to-equity$

Relationship between own fund and borrowing

above one it means the company is leverage for third parties more than own fund

(7)

$\frac{EBIT}{Interest \: expense} = TIE$

we make this division of the earning before interest and taxes against our interest expense.

This compares the operating income against the interest expense we got for borrowing below zero is a serious problem as the company falls to meet the interest of his debt

(8)

$\frac{Net \: Income}{Sales} = Profit \: Margin$