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Indicate what is meant by the following ratio calculations.
1. Liquidity Ratios
Current Ratio = Current Assets
Current Liabilities
= 515800
626900
= 0.82 : 1
Quick Ratio = Quick Assets
Current Liabilities
= 42700 + 205800
626900
= 0.40
Cash Ratio = Cash & Cash Equivalents
Current Liabilities
= 42700
626900
= 0.0681 : 1
2. Turnover / Activity Ratios
Inventory Turnover = COGS
Average Inventories
Average Inventories = (Beginning Inventory + Closing Inventory)/2
=(287,000+267,300)/2
= 277150
= 1229122
2,77,150
= 4.43
Accounts Receivable Turnover = Net Credit Sales
Average accounts receivables
= 37135000
205800
= 180.442
Accounts Payable Turnover = Total credit Purchases
Accounts Payable
= 466520
318300
= 1.465
3. Profitability Ratios
Gross Profit Margin = Revenue - Cost of goods sold
Revenue
Gross Profit = Revenue Cost of Goods Sold
= 37135000 - 1229122
= 35905878
Gross Profit Margin = 35905878
37315000
= 0.97
Operating Margin = EBIT
Sales Revenue
= 292510
37135000
= 0.01
Return on Equity = Net Income
Average Shareholder Equity
= 615010
81820
= 0.01
4. Debt / Capital Structure Ratios
Debt to Equity Ratio = Total Liabilities
Total Stockholders' Equity
Debt / Equity Ratio = 3,08,600+$40,000
81820
= 4.26
Debt to Total Asset Ratio = Short term debt + Long term debt + Other fixed payments
Total assets
Debt to Total Asset Ratio = 3,08,600 + 40,000
748720
= 0.47
5. Capital Market Value Ratios
Book Value Per Share = Book Value
Number of Shares
= Total Asset Intangible Asset Liability
Number of Shares
= 748720 0 666900
50000
(Share value $1)
= 81820
50000
= 1.6364
Dividend Yield = Dividend
Price
= 55000 / 50000
1.6364
= 668.16
Answer & Explanation
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