The partial financial statement items below were taken from the financial statements of Prone, Inc. This information can be used to correctly solve each of the ratios below. The information is in alphabetical order.
Accounts payable $ 28,000 Net income $ 48,000
Accounts receivable 66,000 Other current liabilities 17,000
Cash 54,000 Total assets 250,000
Gross profit 160,000 Total liabilities 200,000
Income before income taxes 54,000 Wages payable 5,000
Additional information: The number of average common shares outstanding during the year was 40,000.
Instructions: Compute the following:
(a) Current ratio.
(b) Working capital.
(c) Earnings per share.
(d) Debts to total assets ratio.
To earn full credit, you must show the formula you are using, show your computations and explain the meaning of each of your ratio.