221_Solutions_B_Fa_05 - Cambridge Business Publishers, 2006...

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Unformatted text preview: Cambridge Business Publishers, 2006 Solutions Manual, Appendix B 1 Exercise B-15 a. 1. Current ratio = Current assets / Current liabilities 2008 = $750,000 / $525,000 = 1.43 2007 = $600,000 / $450,000 = 1.33 2. Acid test ratio = Cash + Accounts receivable + Marketable securities Current liabilities 2008 = ($750,000 - $375,000*) / $525,000 = 0.71 2007 = ($600,000 - $275,000*) / $450,000 = 0.72 *Current assets - Inventory (Cash, Accounts receivable, and Marketable securities are not given). 3. Inventory turnover = Cost of goods sold / Average inventory 2008 = $1,680,000 / ([$375,000 + $275,000]/2) = 5.17 times 2007 = $1,450,000 / ([$275,000 + $325,000]/2) = 4.83 times 4. Days receivables outstanding = Ending accounts receivables Average daily sales 2008 = $153,000 / ($1,850,000/365) = 30.19 days 2007 = $165,000 / ($2,000,000/365) = 30.11 days b. During 2008, York Company's short-term solvency remained substantially unchanged from 2007. Small improvements were noted in the current ratio and inventory turnover, whereas the acid test ratio and the number of days receivables outstanding were about the same as the previous year. Cambridge Business Publishers, 2006 Solutions Manual, Appendix B 2 Exercise B-16 a. Times-interest-earned = Net income + Interest expense + Income taxes Interest expense = $1,899,450 + $1,475,300 + $50,250 $1,475,300 = $3,425,000 / $1,475,300 = 2.32 times b. Debt-to-equity ratio = Total liabilities / Total stockholders' equity = $600,000 / $250,000 = 2.40 Exercise B-17 a. 1. Asset turnover = Sales / Average total assets = $8,196,000 / ([$7,349,000 + $6,553,000]/2) = 1.179 times 2. Return on sales = (Net income + Interest expense) / Sales = ($619,000 + $115,000) / $8,196,000 = 0.090 or 9.0% 3. Return on assets = Net income + Interest expense Average total assets = ($619,000 + $115,000) ( $7,349,000 + $6,553,000)/2...
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This homework help was uploaded on 02/19/2008 for the course H ADM 221 taught by Professor Gpotter during the Spring '05 term at Cornell University (Engineering School).

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221_Solutions_B_Fa_05 - Cambridge Business Publishers, 2006...

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