81. Given the formula for each of the following ratios and then explain what each ratio measures.
a. Return on Investment
b. Quick Ratio
c. Gross Margin Ratio
d. Return on Owners’ Equity
PROBLEMS
82. Using the financial statements from the (instructor supplies the income statement and balance sheet of a company and insert name here) calculate each of the following ratios and briefly describe what the results indicate.
(a.) Return on Investment
(b.) Quick Ratio
(c.) Gross Margin Ratio
(d.) Current Ratio
(e.) Return on Sales Ratio
(f.) Debt to Equity Ratio
(g.) Return on Owners’ Equity
(Note to the Instructor: This problems combines the ratios from Chapters 1 &2)
82. Using the financial statements from the (instructor supplies the income statement and balance sheet of a company and insert name here) calculate each of the following ratios and briefly describe what the results indicate.
(a.) Current Ratio
(b.) Quick Ratio
(c.) Gross Margin Ratio
(d.) Return on Sales Ratio
(e.) Debt to Equity Ratio
(f.) Return on Investment Ratio
(g.) Return on Owners’ Equity
(h.) Accounts Receivable Turnover
(i.) Inventory Turnover
(j.) Accounts Payable Turnover
83. Using the financial statements below calculate each of the following ratios and briefly describe what the results of each indicate.
(a.) Return on Investment
(b.) Quick Ratio
(c.) Debt to Equity Ratio
(d.) Return on Owners’ Equity
(e.) Accounts Receivable Turnover
(f.) Inventory Turnover
Banner Corporation
Balance Sheet
December 31, 2008
Banner Corporation
Balance Sheet
December 31, 2008
Current Assets
Current Liabilities
Cash
$ 20,000
Accounts Payable
$ 140,000
Accounts Receivable
100,000
Wages Payable
200,000
Inventory
300,000
Total Current Liabilities
$ 340,000
Total Current Assets
$420,000
Long-Term Liabilities
Property, Plant & Equipment
Long Term Notes Payable
$1,000,000
Land
$300,000
Total Liabilities
$1,340,000
Buildings
800,000
Equipment
90,000
Total Property Plant &
Owners’ Equity
$ 270,000
Equipment
$1,190,000
Total Liabilities and
Total Assets
$1,610,000
Owners’ Equity
$1,610,000
Total Assets 12/31/07
1,400,000
Accts Rec 12/31/07
$75,000
Total Owners’ Equity 12/31/07
$250,000
Accts Pay 12/31/07
$100,000
Banner Corporation
Income Statement
For the year ended Dec 31, 2008
Sales
$4,200,000
Cost of Goods Sold
1,800,000
Gross Margin
$2,400,000
Operating Expenses
1,800,000
Operating Income
$ 600,000
Tax Expense
180,000
Net Income
$ 420,000
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