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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.
cf_ratio_analysis_template.xlsx
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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