Ace Kitchen Works, Inc. - Liquidity Ratios, Activity Measures, Profitability Ratios

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1.  Analysis of Liquidy:  Based on the comparative income statement and balance sheet of Ace Kitchen Works, Inc., that follow, compute the following liquidity measures:

 

(a) Quick or acid-test ratio

(b) Current ratio

(c) Working capital 

 

2.  Analysis of Activity Measures:  Based on the financial statement data, compute the following activity measures for:

(a) Accounts receivable turnover

(b) Merchandise inventory turnover

(c) Asset turnover 

 

3.  Analysis of Profitability:  Based on the financial statement data, compute the following profitability

measures:

(a) profit margin ratio

(b) Return on assets

(c) Return on common stockholders’ equity

(d) Earnings per share of common stock

 

 

Ace Kitchen Work, Inc.

Comparative Income Statement

For Years Ended December 31, 20-2 and 20-1

 

                                            20-220-1

Net sales (on account)   2,643,000.00   2,176,400.00

Cost of goods sold        1,868,200.00   1,614,200.00

Gross profit                  774,800.00       562,200.00

Operating expenses         244,600.00       221,800.00

Other expense (interest)       24,200.00         24,200.00

Income tax expense         161,900.00       101,200.00

Net income                 344,100.00       215,000.00

  

Ace Kitchen Work, Inc.

Comparative Balance Sheet

December 31, 20-2 and 20-1

 

                                       20-2                   20-1

Cash                                     129,000.00       106,800.00

Government notes            300,000.00       300,000.00

Accounts receivable (net)       892,400.00       787,400.00

Merchandide inventory       952,800.00       866,200.00

Supplies and prepayments         50,600.00         46,600.00

Land                                       108,200.00       108,200.00

Building (net)                   330,000.00       390,600.00

Office equipment (net)               13,600.00         15,000.00

   Total assets                       2,776,600.00   2,620,800.00

  

Current liabilities (accounts payable) 608,000.00      507,200.00

Bonds payable                              200,000.00       220,000.00

   Total liabilities                              808,000.00       727,200.00 

Common stock ($10 par, 170,000 shares)   1,700,000.00   1,700,000.00

Retained earnings                     268,600.00       193,600.00

   Total stockholder's equity                1,968,600.00   1,893,600.00

Total liabilities and stockholder's equity   2,776,600.00   2,620,800.00

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