Answer and Explanation:
According to the scenario, formula and the computation of the given data are as follow:-
Current Ratio = Current Assets ÷ Current Liabilities
where,
Currents assets for year is
= Cash + Account Receivable(Net) + Inventory
= $4,500 + $20,800 + $10,100
= $35,400
And, the current liabilities is $ 12,700
So, the current ratio is
= $35,400 ÷ $12,700
= 2.79 times
Acid Test Ratio (2017) = (Accounts Receivable + Cash) ÷ (Current Liabilities)
= ($20,800+$4,500) ÷ ($12,700)
= $25,300 ÷ $12,700
= 1.99 times
Accounts Receivable Turnover is
= Sales ÷ (Opening Receivable + Closing Receivable ÷ 2)
= $110,000 ÷ ($23,300 + $20,800 ÷ 2)
= $110,000 ÷ $22,050
= 4.99 Times
Inventory Turnover Times is
= Cost of Goods Sold ÷ (Opening Inventory + Closing Inventory ÷ 2)
= $60,800 ÷ ($7,200 + $10,100 ÷ 2)
= $60,800 ÷ $8,650
= 7.03 Times
Profit Margin is
= Profit ÷ Sales × 100
= $15,000 ÷ $110,000 × 100
= 13.64%
Assets Turnover is
= Sales ÷ (Opening Assets + Closing Assets ÷ 2)
= $110,000 ÷ ($119,500 + $110,300 ÷ 2)
= $110,000 ÷ $114,900
= 0.96 Times
Return on Assets is
= Profit ÷ (Opening Assets + Closing Assets ÷ 2)
= $15,000 ÷ ($119,500 + $110,300 ÷ 2)
= $15,000 ÷ $114,900
= 13.05%
As we know that
Equity = Common Stock + Retained Earnings
Opening Equity is
= $68,600 + $19,800
= $88,400
Closing Equity is
= $74,900 + $22,700
= $97,600
Return on Common Stock Holder’s Equity is
= Profit ÷ (Opening Equity + Closing Equity ÷ 2)
= $15,000 ÷ ($88,400 + $97,600 ÷ 2)
=$15,000 ÷ $93,000
= 16.13%
Debt to Asset Ratio is
= Borrowing ÷ Assets
= 0 ÷ $110,300
= 0
By calculating these ratios we can analysis the organization financial profitability, liquidity, financial performance, and financial position. These ratios gives the exact picture of the company.
