g If the beginning work in process includes 200 units that are 20% complete with respect to conversion and 30% complete with res
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Answer:
(a) Current ratio = 2.746
(b) Acid-test ratio = 1.423
(c) Debt to assets ratio = 47.48%
(d) Return on assets = 6.15%
Explanation:
For Balance Sheet, pleased see attached file.
Current Ratio = Current Asset / Current Liabilities
Current Ratio = 212,800 / 77,500
Current Ratio = 2.746
Acid-Test Ratio = (Current Assets – Inventories) / Current Liabilities
Acid-Test Ratio = (212,800 – 102,500) / 77,500
Acid-Test Ratio = 1.423
Debt to Asset ratio = (Total Liabilities / Total Assets)*100
Debt to Asset ratio = (205,500 / 432,800)*100
Debt to Asset ratio = 47.48%
ROA = (Net Income / Total Assets)*100
ROA = (26,600 / 432,800)*100
ROA = 6.15%
The Current Ratio is a liquidity measure that shows the ratio between current asset and current liabilities. It tells how many dollars of the current asset are per dollar of current debts, that gives an idea of the company`s ability to perform its debts.
The Quick Ratio is also a liquidity indicator, but using its most liquid assets, to pay its current liabilities at maturity. The inventory, although it is a current asset, is not considered, since it cannot be converted into cash in a very short term.
The difference between the Quick Ratio and the Current Ratio, implies that while both are measures of the company's ability to pay its debts, the quick ratio also tells how much the company depends on its inventory to get that objective.
The Debt to Assets ratio is a financial ratio that shows how much of a company assets is owed to its creditors.
ROA is a financial indicator that gives an idea as to how efficient a company's management is at using its assets to generate earnings, by determining how profitable a company is relative to its total assets.
Answer: Project X
Explanation:
The Payback period is the amount of time it would take for the cash inflows accruing from an investment to payoff the cost of the investment.
Project X has a constant cashflow of $24,000 for 3 years and a cost of $68,000 for the Payback period is;
= 68,000/24,000
= 2.83 years
Project Y has an uneven cash flow with a cost of $60,000. Payback is calculated as;
= Year before payback + Amount left to be paid/cashflow in year of payback
Year before payback = 4,000 + 26,000 + 26,000
= $56,000
This means that the third year is the year before payback.
60,000 - 56,000 = $4,000
Payback period = 3 + 4,000/20,000
= 3.2 years
Based on a Payback period of 3 years, only Project X should be chosen as it pays back in less than 3 years.
