Following is the balance sheet of Gibson Company for 2018 GI

Following is the balance sheet of Gibson Company for 2018: GIBSON COMPANY Balance sheet Assets Cash Marketable securities Accounts receivable Inventory Property and equipment Accumulated depreciation Total assets s 14,500 8,060 13,040 10,850 171,000 (13,000) $204,450 Liabilities and Stockholders\' Equity Accounts payable Current notes payable Mortgage payable Bonds payable Common stock Retained earnings $ 8,900 3,400 4,050 21,300 113,100 53,700 $204,450 Total liabilities and stockholders\' equity The average number of common stock shares outstanding during 2018 was 860 shares. Net income for the year was $15,800 Required Compute each of the following: (Round your answers to 2 decimal places.) a. Current ratio b. Earnings per share C. Quick (acid-test) ratio d. Return on investment e. Return on equity f. Debt to equity ratio 3.78 per share 3.12 10.82 % 9.471 % 22.57 %

Solution

Answer

a ) current ratio = current assets / current liabilities

current assets = cash + marketable securities +account receivable + inventory

= 14500 + 8060 + 13040 + 10850

= 46450

current liabilites = account payable + current notes payable

= 8900 + 3400

= 12300

current ratio = 46450 / 12300

= 3.78

b ) earnings per share = net income / average number of shares

= 15800 / 860

= 18.372 per share