RWJChapter3ProblemSolutions - Chapter 3 Working with Financial Statements Some recent financial statements for Smolira Golf Corp follow Use this

RWJChapter3ProblemSolutions - Chapter 3 Working with...

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Chapter 3: Working with Financial Statements Some recent financial statements for Smolira Golf Corp. follow. Use this information to work Problems 26 through 30: SMOLIRA GOLF CORP. 2008 and 2009 Balance Sheets Assets Liabilities and Owners’ Equity 2008 2009 2008 2009 Current Assets Current Liabilities Cash $ 21,860 $ 22,050 A/P $ 19,320 $ 22,850 A/R 11,316 13,850 Notes Payable 10,000 9,000 Inventory 23,084 24,650 Other 9,643 11,385 Total Current Assets $ 56,260 $ 60,550 Total Current Liabs $ 38,963 $ 43,235 Fixed Assets Long-Term Debt $ 75,000 $ 85,000 Net PP&E $234,068 $260,525 Owners’ Equity Common Stock $ 25,000 $ 25,000 Retained Earnings 151,365 167,840 Total Owners’ Equity $176,365 $192,840 Total Assets $290,328 $321,075 Total Liabs and OE $290,328 $321,075 SMOLIRA GOLF CORP. 2009 Income Statement Sales $305,830 Cost of Goods Sold 210,935 Depreciation 26,850 Earnings Before Interest and Taxes (EBIT) $ 68,045 Interest Expense 11,930 Earnings Before Taxes (EBT) $ 56,115 Taxes (35%) 19,640 Net Income $ 36,475 Dividends $20,000 Transferred to Retained Earnings $16,475 $36,475 26. Calculating Financial Ratios: Find the following financial ratios for Smolira Gold Corp. (use year-end figures rather than average values where appropriate):
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Short-Term Solvency Ratios: 2008 2009 a. Current Ratio 1.4439 1.4005 The current ratio is current assets divided by current liabilities: bilities CurrentLia ets CurrentAss io CurrentRat 44393399 . 1 963 , 38 $ 260 , 56 $ 2008 io CurrentRat 40048572 . 1 235 , 43 $ 550 , 60 $ 2009 io CurrentRat 2008 2009 b. Quick Ratio 0.8515 0.8303 The quick ratio is current assets minus inventory divided by current liabilities: bilities CurrentLia Inventory ets CurrentAss QuickRatio 85147448 . 0 963 , 38 $ 084 , 23 $ 260 , 56 $ 2008 QuickRatio 83034578 . 0 235 , 43 $ 650 , 24 $ 550 , 60 $ 2009 QuickRatio 2008 2009 c. Cash Ratio 0.5610 0.5100 The cash ratio is cash divided by current liabilities: bilities CurrentLia Cash CashRatio 56104509 . 0 963 , 38 $ 860 , 21 $ 2008 CashRatio 51000347 . 0 235 , 43 $ 050 , 22 $ 2009 CashRatio Asset Utilization Ratios: 2009 d. Total Asset Turnover (TAT) 0.9525X
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The TAT ratio is net sales divided by total assets: s TotalAsset NetSales TATRatio 95251888 . 0
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  • Spring '14
  • Heggestad,ArnoldA
  • Finance, Ratio, Financial Ratio, total assets, Smolira Golf, SMOLIRA GOLF CORP

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