The following information is available about the company Sol

Solution

\'INCOME STATEMENT OF PAPER INDUSTRIES FOR THE YEAR ENDED MARCH 31 \'

\' BALANCE SHEET OF PAPER INDUSTRIES AS AT MARCH 31 \'

$1,468,000

workings :

In \' e\' section there are some ratios are given , we are using them to find out figures in financial statement . firstly you should write the corresponding formula and find missing values . please make sure that you do question slowly and keep in mind want you want to find , focuss .

1) Account recievable turnover = sales / recievable

15 = $2,700,000/ recievable

Recievable = $2,700,000/15

=$180,000

2) acid test ratio = cash+ recievable / current liability

1.15 = (cash + $180,000) / $220,000

$ 73,000 =$220,000*1.15- ($180,000)

3) Current ratio = cash + inventory + recievables /( current liability)

2.2 =73,000 + inventory + 180,000 /(220,000)

$231,000 = 2.2* 220,000 -(73,000+180,000)

4) Inventory turnover = cost of sale / inventory

8 = cost of sale / 231,000

$1,848,000 = 231,000* 8

5) Times interest earned ratio = PBIT / interest

7 = PBIT / 42,000

$294,000 = 42,000 * 7

6) Income tax = $ 294,000 @ 40%

= $100,800

7) Return on total asset = PBIT / total asset

14% = 294,000/ totala sset

$2,100,000 = 294,000/14%

8) Earnings per share = earnings / total share

3.78 = 151,200 / total share

40,000shares = 151,200 / 3.78

also , common stock = 40,000 shares @ $2.8 per share

= $112,000

9) Debt to equity = debt / equity

0.8 = debt / $112,000

896,000 =112,000 * 0.8