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AEC3133 HW3 - 365 days = 32.33 days 11.29 iii Accounts...

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Kelley Benham AEC 3133 Homework 3 1. a. Liquidity ratios.  i. Current ratio Formula: Current Assets    Current liabilities 174,000     =  1.93 89,950 ii. Quick ratio Formula: (Current assets – inventory)        Current Liabilities (174,000-127,000)     = .523    89,950 b. Solvency ratios i. Debt to equity ratio Formula: Total Liabilities   Net worth (OE) 410,000     = .672 610,000 ii. Ownership ratio Formula: Total Equity
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Kelley Benham AEC 3133 Homework 3    Total Assets 1,020,000     = 0 1,020,000 c. Activity (or efficiency) ratio i. Inventory turnover (in days) Formula: Cost of Goods Sold Inventory Level 1,129,000    = 8.89 127,000 365 days     = 41.06 days 8.89 ii. Accounts receivable turnover Formula: Credit Sales   Accounts Receivable .30 (1,129,000)    = 11.29 30,000
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Unformatted text preview: 365 days = 32.33 days 11.29 iii. Accounts payable turnover Formula: Credit Purchases Kelley Benham AEC 3133 Homework 3 Accounts Payable .20( 1,465,000) =5.53 53,000 365 days =66 days 5.53 d. Profitability ratios i. Return on equity ROE Formula: Pre-tax income Total equity 51,000 = .05 or 5% 1,020,000 ii. Return on investment or ROI Formula: Pre-tax income Total Assets 51,000 = .05 or 5% 1,020,000 iii. Return on sales or ROS Formula: Pre-tax Profit Total Sales 51,000 = .03 or 3% Kelley Benham AEC 3133 Homework 3 1,465,000 2. a. i. 1.93 Good ii. .523 Bad b. i. .672 bad ii. 0 bad c. i. 41.06 days ii. 32.33 days iii. 66 days d. i. 5% ii. 5% bad iii. 3% good...
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