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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:

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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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