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PE 17-1A page 771

PE 17-1A page 771. PE 17-1A page 771 Answer. PE 17-2A page 771. PE 17-2A page 771 Answer. PE 17-3A page 772. PE 17-3A page 772 Answer. a. Current Ratio = Current Assets/Current Liabilities Current Ratio = ($125,000 + $40,000 + $30,000 + $120,000)/$150,000 Current Ratio = 2.1

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PE 17-1A page 771

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  1. PE 17-1A page 771

  2. PE 17-1A page 771 Answer

  3. PE 17-2A page 771

  4. PE 17-2A page 771 Answer

  5. PE 17-3A page 772

  6. PE 17-3A page 772 Answer a. Current Ratio = Current Assets/Current Liabilities Current Ratio = ($125,000 + $40,000 + $30,000 + $120,000)/$150,000 Current Ratio = 2.1 b. Quick Ratio = Quick Assets/Current Liabilities Quick Ratio = ($125,000 + $40,000 + $30,000)/$150,000 Quick Ratio = 1.3

  7. PE 17-4A page 772

  8. PE 17-4A page 772 Answer

  9. PE 17-5A page 772

  10. PE 17-5A page 772 Answer • Inventory Turnover = Cost of Goods Sold/Average Inventory • Inventory Turnover = $465,000/$71,500 • Inventory Turnover = 6.5 • Number of Days’ Sales in Inventory = Average Inventory/ Average Daily Costof Goods Sold • Number of Days’ Sales in Inventory = $71,500/($465,000/365) = $71,500/$1,274 • Number of Days’ Sales in Inventory = 56.1 days

  11. PE 17-6A page 773

  12. PE 17-6A page 773 Answer a. Fixed Asset Turnover Ratio = Fixed Assets/Long-Term Liabilities Fixed Asset Turnover Ratio = $700,000/$218,750 Fixed Asset Turnover Ratio = 3.2 b. Ratio of Liabilities to Total Stockholders’ Equity = Total Liabilities/TotalStockholders’ Equity Ratio of Liabilities to Total Stockholders’ Equity = $235,000/$940,000 Ratio of Liabilities to Total Stockholders’ Equity = 0.3

  13. PE 17-7A page 773

  14. PE 17-7A page 773 Answer Number of Times Interest Charges Are Earned = (Income Before Income Tax + Interest Expense)/Interest Expense Number of Times Interest Charges Are Earned = ($375,000 + $120,000)/$120,000 Number of Times Interest Charges Are Earned = 4.1

  15. PE 17-8A page 773

  16. PE 17-8A page 773 Answer Ratio of Net Sales to Assets = Net Sales/Average Total Assets Ratio of Net Sales to Assets = $1,170,000/$650,000 Ratio of Net Sales to Assets = 1.8

  17. PE 17-9A page 773

  18. PE 17-9A page 773 Answer Rate Earned on Total Assets = (Net Income + Interest Expense)/ Average Total Assets Rate Earned on Total Assets = ($225,000 + $20,000)/$3,250,000 Rate Earned on Total Assets = $245,000/$3,250,000 Rate Earned on Total Assets = 7.5%

  19. PE 17-10A page 774

  20. PE 17-10A page 774 Answer a. Rate Earned on Stockholders’ Equity = Net Income/Average Stockholders’ Equity Rate Earned on Stockholders’ Equity = $225,000/$1,750,000 Rate Earned on Stockholders’ Equity = 12.9% b. Rate Earned on Common Stockholders’ Equity = (Net Income – Preferred Dividends)/Average Common Stockholders’ Equity Rate Earned on Common Stockholders’ Equity = ($225,000 – $20,000)/ $1,000,000 Rate Earned on Common Stockholders’ Equity = 20.5%

  21. PE 17-11A page 774

  22. PE 17-11A page 774 Answer a. Earnings per Share on Common Stock = (Net Income – Preferred Dividends)/ Shares of Common Stock Outstanding Earnings per Share = ($115,000 – 15,000)/20,000 Earnings per Share = $5.00 b. Price-Earnings Ratio = Market Price per Share of Common Stock/ Earnings per Share on Common Stock Price-Earnings Ratio = $65.00/$5.00 Price-Earnings Ratio = 13.0

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