PR 144B Measures of liquidity solvency and profitability Obj

PR 14-4B Measures of liquidity, solvency and profitability Obj. 3, 4, 5 9. Ratio f liabilities The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel equity, 0.4 to stockholders\'common stock was $119.70)on December 31, 20Y2. Stargel Inc Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 EXCEL TEMPLATE Net income Total Dividends $5,375,000 $4,545,000 925,000 6275,000 $5470,000 On preferred stock 45,000 45,000 50,000 50,000 Total dividends Retained earnings, December 31 8 0.000 $5.375.000

Solution

1

Working Capital

Current Assets

-

Current Liabilities

Working Capital

20X2

$ 3,690,000.00

-

$   900,000.00

$               2,790,000.00

2

Current Ratio

   Numerator

/

   denominator

Current Ratio

Current Assets

/

Current liabilities

Current Ratio

20X2

$ 3,690,000.00

/

$   900,000.00

4.1

to 1

3

Quick Ratio

   Numerator

/

   denominator

Quick Ratio

Liquid Assets

/

Current liabilities

Quick Ratio

20X2

$ 2,500,000.00

$   900,000.00

2.8

to 1

Quick assets are Current assets minus Inventories.

4

Accounts Receivable Turnover

   Numerator

/

   denominator

Accounts Receivable Turnover

Sales

/

Average Accounts Receivables

Accounts Receivable Turnover

20X2

$       10,000,000.00

$                   625,000.00

16

Times

Average Accounts Receivables ((510000+740000)/2)

5

Number of days sales in Receivables

   Numerator

/

   denominator

Number of days sales in Receivables

Accounts Receivables

/

Sales

Number of days sales in Receivables

20X2

$             740,000.00

/

(10000000)/365

$        27

days

Total sales are assumed to be Total Credit sales.

6

Inventory Turnover

   Numerator

/

   denominator

Inventory Turnover

COGS

/

Average Inventory

Inventory Turnover

20X2

$         5,350,000.00

/

$               1,070,000.00

5.0

times

Average Inventory ((1190000+950000)/2)

1	Working Capital
	Current Assets	-	Current Liabilities	Working Capital
20X2	$ 3,690,000.00	-	$   900,000.00	$               2,790,000.00