03 Aug Apply ratio analysis to financial stateme
Apply ratio analysis to financial statements.
Introduction
Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.
Ratio analysis is done to compare trends over time.
Ratio analysis is a managerial accounting tool for making and evaluating managerial decisions.
Instructions
Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.
Use the Ratio Analysis Template [XLSX] to complete this assessment. Complete the problems based on the data provided in the template.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:
- Competency 4: Analyze financial statements.
- Calculate a current ratio.
- Calculate an acid-test ratio.
- Calculate the number of days sales are uncollected.
- Calculate an inventory turnover.
- Calculate the amount sold per day in the inventory of an entity.
- Calculate a debt-to-equity ratio.
- Calculate the number of times interest is earned.
- Calculate a profit margin ratio.
- Calculate a total asset turnover.
- Calculate a return on total assets.
- Calculate a return on common stockholders' equity.
- Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
Sheet1
| BUS-FPX4061 – Managerial Accounting Principles | ||||||||||||||||||||||||||||
| Assessment 10: Ratio Analysis Worksheet | ||||||||||||||||||||||||||||
| Problem 1 | Input values | |||||||||||||||||||||||||||
| Solve the given problem based on the following scenario. | Company name | Crouch Corp. | ||||||||||||||||||||||||||
| Crouch Corp.'s balance sheet and income statement, including all credit sales, are given in the table below. | Tax rate | 20% | ||||||||||||||||||||||||||
| As of December 31, 2016: | Balance sheet date | 12/31/17 | ||||||||||||||||||||||||||
| · | Inventories were $15,660. | 12/31/16 | ||||||||||||||||||||||||||
| · | Total assets were $85,410. | Inventories | $15,660 | |||||||||||||||||||||||||
| · | Common stock was $31,950. | Total assets | $85,410 | |||||||||||||||||||||||||
| · | Retained earnings were $11,430. | Common stock | $31,950 | |||||||||||||||||||||||||
| Retained earnings | $11,430 | |||||||||||||||||||||||||||
| Crouch Corp. Income Statement (December 31, 2017) | Crouch Corp. Income Statement (December 31, 2017) | |||||||||||||||||||||||||||
| Sales | $ 283,950 | Sales | 283,950 | |||||||||||||||||||||||||
| Cost of goods sold | 212,490 | Cost of goods sold | 212,490 | |||||||||||||||||||||||||
| Gross profit | 71,460 | Gross profit | 71,460 | |||||||||||||||||||||||||
| Operating expenses | 44,280 | Operating expenses | 44,280 | |||||||||||||||||||||||||
| Interest expenses | 1,980 | Interest expenses | 1,980 | |||||||||||||||||||||||||
| Income before taxes | 25,200 | Income before taxes | 25,200 | |||||||||||||||||||||||||
| Taxes (at 20%) | 5,040 | Taxes (at 20%) | 5,040 | |||||||||||||||||||||||||
| Net income | $ 20,160 | Net income | 20,160 | |||||||||||||||||||||||||
| Crouch Corp. Balance Sheet (December 31, 2017) | ||||||||||||||||||||||||||||
| Crouch Corp. Balance Sheet (December 31, 2017) | Assets | Amount ($) | Liability and Equity | Amount ($) | ||||||||||||||||||||||||
| Assets | Amount ($) | Liability and Equity | Amount ($) | Cash | 5,490 | Accounts payable | 10,350 | |||||||||||||||||||||
| Cash | 5,490 | Accounts payable | 10,350 | Short-term investment | 6,210 | Accrued wages payable | 2,970 | |||||||||||||||||||||
| Short-term investment | 6,210 | Accrued wages payable | 2,970 | Accounts receivable | 10,890 | Income taxes payable | 2,340 | |||||||||||||||||||||
| Accounts receivable | 10,890 | Income taxes payable | 2,340 | Notes receivable | 2,700 | Notes payable (long-term) | 27,000 | |||||||||||||||||||||
| Notes receivable | 2,700 | Notes payable (long-term) | 27,000 | Inventory | 12,150 | Common stock | 31,500 | |||||||||||||||||||||
| Inventory | 12,150 | Common stock | 31,500 | Prepaid expenses | 1,800 | Retained earnings | 31,590 | |||||||||||||||||||||
| Prepaid expenses | 1,800 | Retained earnings | 31,590 | Plant | 66,510 | |||||||||||||||||||||||
| Plant | 66,510 | Total assets | 105,750 | Total liability and equity | 105,750 | |||||||||||||||||||||||
| Total assets | 105,750 | Total liability and equity | 105,750 | |||||||||||||||||||||||||
| TRUE | ||||||||||||||||||||||||||||
| Compute the following and show your work. | TRUE | |||||||||||||||||||||||||||
| Ratio | Calculation | |||||||||||||||||||||||||||
| Current ratio | ||||||||||||||||||||||||||||
| Days' sales uncollected | ||||||||||||||||||||||||||||
| Days' sales in inventory | ||||||||||||||||||||||||||||
| Times interest earned | ||||||||||||||||||||||||||||
| Total asset turnover | ||||||||||||||||||||||||||||
| Return on common stockholders' equity | ||||||||||||||||||||||||||||
| Acid-test ratio | ||||||||||||||||||||||||||||
| Inventory turnover | ||||||||||||||||||||||||||||
| Debt-to-equity ratio | ||||||||||||||||||||||||||||
| Profit margin ratio | ||||||||||||||||||||||||||||
| Return on total assets | ||||||||||||||||||||||||||||
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