have been asked to compute the following amounts and ratios for both this year and last year: a. Working capital. b. Current ratio. c. Acid-test ratio. d. Average collection period. (The accounts receivable at the beginning of last year totaled $350,000.) e. Average sale period. (The inventory at the beginning of last year totaled $720,000.) f. Debt-to-equity ratio. g. Times interest earned. 2. For both this year and last year (carry computations to one decimal place): a. Present the balance sheet in common-size form. b. Present the income statement in common-size form down through net income. 3. From your analysis in (1) and (2) above, what problems or strengths do you see for Modern Building Supply? Make a recommendation as to whether the loan should be approved. PROBLEM 13–12A Financial Ratios for Common Stockholders [LO2]
have been asked to compute the following amounts and ratios for both this year and last year: a. Working capital. b. Current ratio. c. Acid-test ratio. d. Average collection period. (The accounts receivable at the beginning of last year totaled $350,000.) e. Average sale period. (The inventory at the beginning of last year totaled $720,000.) f. Debt-to-equity ratio. g. Times interest earned. 2. For both this year and last year (carry computations to one decimal place): a. Present the balance sheet in common-size form. b. Present the income statement in common-size form down through net income. 3. From your analysis in (1) and (2) above, what problems or strengths do you see for Modern Building Supply? Make a recommendation as to whether the loan should be approved. PROBLEM 13–12A Financial Ratios for Common Stockholders [LO2]
Brewer-ch13-Problems.docx