Posted: August 3rd, 2022

Assessment 10: Ratio Analysis

 

Apply ratio analysis to financial statements.

Introduction

Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.

Ratio analysis is done to compare trends over time.

Ratio analysis is a managerial accounting tool for making and evaluating managerial decisions.

Instructions

Note: Accounting requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order.

Use the

Ratio Analysis Template [XLSX]

 to complete this assessment. Complete the problems based on the data provided in the template.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:

  • Competency 4: Analyze financial statements.

    Calculate a current ratio.
    Calculate an acid-test ratio.
    Calculate the number of days sales are uncollected.
    Calculate an inventory turnover.
    Calculate the amount sold per day in the inventory of an entity.
    Calculate a debt-to-equity ratio.
    Calculate the number of times interest is earned.
    Calculate a profit margin ratio.
    Calculate a total asset turnover.
    Calculate a return on total assets.
    Calculate a return on common stockholders’ equity.

  • Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.

Sheet1

Analysis Worksheet

were

.

·     

were

.

Inventories $15,660

·     

was

.

Total assets $85,410

·     

were

.

Common stock $31,950

Retained earnings $11,430

Crouch Corp. Income Statement (December 31, 2017)

Sales 283,950

Cost of goods sold 212,490

Gross profit 71,460

Operating expenses 44,280

Interest expenses 1,980

Income before taxes 25,200

Taxes (at 20%) 5,040

Net income 20,160

Crouch Corp. Balance Sheet (December 31, 2017)

Amount ($)

Assets Amount ($) Liability and Equity Amount ($)

Cash 5,490 Accounts payable 10,350

Short-term investment 6,210 Accrued wages payable 2,970

Accounts receivable 10,890 Income taxes payable 2,340

Notes receivable 2,700 Notes payable (long-term) 27,000

Common stock

Inventory 12,150 Common stock 31,500

Retained earnings

Prepaid expenses 1,800 Retained earnings 31,590

Plant 66,510 Total assets

105,750

Total assets 105,750 Total liability and equity 105,750

TRUE

Ratio

BUS-FPX4061 – Managerial Accounting Principles
Assessment 10:

Ratio
Problem 1 Input values
Solve the given problem based on the following scenario. Company name Crouch Corp.
Crouch Corp.’s balance sheet and income statement, including all credit sales, are given in the table below. Tax rate 20%
As of December 31, 2016: Balance sheet date 12/31/17
·      Inventories $15,660 12/31/16
Total assets $85,410
Common stock $31,950
Retained earnings $11,430
Crouch Corp. Income Statement (December 31, 2017)
Sales $

283,950
Cost of goods sold 212,490
Gross profit 71,460
Operating expenses 44,280
Interest expenses 1,980
Income before taxes 25,200
Taxes (at 20%) 5,040
Net income $

20,160
Crouch Corp. Balance Sheet (December 31, 2017)
Assets Amount ($) Liability and Equity
Cash 5,490 Accounts payable 10,350
Short-term investment 6,210 Accrued wages payable 2,970
Accounts receivable 10,890 Income taxes payable 2,340
Notes receivable 2,700 Notes payable (long-term) 27,000
Inventory 12,150 31,500
Prepaid expenses 1,800 31,590
Plant 66,510
105,750 Total liability and equity
TRUE
Compute the following and show your work.
Calculation
Current ratio
Days’ sales uncollected
Days’ sales in inventory
Times interest earned
Total asset turnover
Return on common stockholders’ equity
Acid-test ratio
Inventory turnover
Debt-to-equity ratio
Profit margin ratio
Return on total assets

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