Financial Statements accounting questions
1. Using the data from the following Financial Statements, compute:
a. Current ratio:
b. Quick ratio:
c. Profit margin on sales:
d. Return on total assets:
e. Return on equity:
| Balance Sheet | Ajax Corp. | Acme, Inc. | |
| Cash |
$2,255,000 |
$67,000 |
|
| Accounts Receivable |
$565,000 |
$1,110,000 |
|
| Inventory |
$1,332,000 |
$2,441,000 |
|
| Total Current Assets |
$4,152,000 |
$3,618,000 |
|
| Net Property, Plant and Equipment |
$369,000 |
$1,327,000 |
|
| Other Assets |
$211,000 |
$597,000 |
|
| Total Assets |
$4,732,000 |
$5,542,000 |
|
| Accounts Payable |
$27,000 |
$168,000 |
|
| Notes Payable Sort Term |
$426,000 |
$819,000 |
|
| Other Short Term Liabilities |
$2,000 |
$56,000 |
|
| Total Current Liabilities |
$455,000 |
$1,043,000 |
|
| Notes Payable Long Term |
$1,222,000 |
$943,000 |
|
| Total Liabilities |
$1,677,000 |
$1,986,000 |
|
| Stockholders’ Equity |
$3,055,000 |
$3,556,000 |
|
| Total Liabilities and Stockholders’ Equity |
$4,732,000 |
$5,542,000 |
| Income Statement | Ajax Corp. | Acme, Inc. | |
| Sales |
$32,752,000 |
$4,835,000 |
|
| Cost of Sales |
$28,273,000 |
$2,966,000 |
|
| Gross Profit |
$4,479,000 |
$1,869,000 |
|
| Selling, General and Administrative Expenses |
$2,541,000 |
$912,000 |
|
| Income before Interest and Taxes |
$1,937,000 |
$957,000 |
|
| Interest Expense |
$129,000 |
$88,000 |
|
| Income before Taxes |
$1,808,000 |
$869,000 |
|
| Taxes |
$723,000 |
$280,000 |
|
| Net Income |
$1,085,000 |
$589,000 |
2. What does each of these financial ratios tell us about a company?
a. Current ratio
b. Quick ratio:
c. Profit margin on sales:
d. Return on total assets:
- e. Return on equity:
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