Explain a company to calculate the ratios


Use the following information from the current year financial statements of a company to calculate the ratios below:

(a) Current ratio.

(b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.)

(c) Days' sales uncollected.

(d) Inventory turnover. (Assume the prior year's inventory was $50,200.)

(e) Times interest earned ratio.

(f) Return on common stockholders' equity. (Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.)

(g) Earnings per share (assuming the corporation has a simple capital structure, with only common stock outstanding).

(h) Price earnings ratio. (Assume the company's stock is selling for $26 per share.)

(i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.)

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Accounting Basics: Explain a company to calculate the ratios
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