Financial Ratios Classifications Measures the income or operating success of a

Financial ratios classifications measures the income

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Financial Ratios Classifications Measures the income or operating success of a company for a given period of time . Measures the ability of the company to survive over a long period of time .
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Chapter 18-8 Ratios Analysis Ratios Analysis Ratios Analysis Ratios Analysis The discussion of ratios will include the following types of comparisons : A single ratio by itself is not very meaningful .
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Chapter 18-9 Ratios Analysis Ratios Analysis Ratios Analysis Ratios Analysis Liquidity Ratios Liquidity Ratios Measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash . Short-term creditors such as bankers and suppliers are particularly interested in assessing liquidity. Liquidity Ratios include the current ratio , the acid-test ratio , receivables turnover , and inventory turnover .
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Chapter 18-10 2009 2008 Net sales 1,818,500 $ 1,750,500 $ Cost of goods sold 1,011,500 996,000 Gross profit 807,000 754,500 Selling and administrative expenses 506,000 479,000 I ncome from operations 301,000 275,500 Other expenses and losses: I nterest expense 18,000 14,000 I ncome before income taxes 283,000 261,500 I ncome tax expense 84,000 77,000 Net income 199,000 $ 184,500 $ Taylor Tool Company I ncome Statement For the Year Ended December 31 Ratios Analysis Ratios Analysis Ratios Analysis Ratios Analysis Illustration
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Chapter 18-11 Assets 2009 2008 Current assets Cash 60,100 $ 64,200 $ Short- term investments 69,000 50,000 Accounts receivable (net) 107,800 102,800 I nventory 133,000 115,500 Total current assets 369,900 332,500 Plant assets (net) 600,300 520,300 Total assets 970,200 $ 852,800 $ Taylor Tool Company Balance Sheets December 31 Ratios Analysis Ratios Analysis Ratios Analysis Ratios Analysis
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Chapter 18-12 Liabilities and Stockholders' Equity 2009 2008 Current liabilities Accounts payable 160,000 $ 145,400 $ I ncome taxes payable 43,500 42,000 Total current liabilities 203,500 187,400 Bonds payable 200,000 200,000 Total liabilities 403,500 387,400 Stockholders' equity Common stock ($5 par) 280,000 300,000 Retained earnings 286,700 165,400 Total stockholders' equity 566,700 465,400 Total liabilities and equity 970,200 $ 852,800 $ Ratios Analysis Ratios Analysis Ratios Analysis Ratios Analysis All sales were on account . The allowance for doubtful accounts was $3,200 on December 31, 2009, and $3,000 on December 31, 2008.
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Chapter 18-13 Ratios Analysis Ratios Analysis Ratios Analysis Ratios Analysis Compute the Current Ratio for 2009. The ratio of 1.82:1 means that for every dollar of current liabilities , the company has $1.82 of current assets .
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