Asked by Albatool Ahmed on Apr 27, 2024
Verified
The following codes are used to compute the ratios below:
A \quad = = = Intangible assets
B \quad = = = Ac counts receivable
C \quad = = = Cash flow from operations
D \quad = = = Cost of goods sold
E \quad = = = Average common share outstanching
F \quad = = = Cash
G \quad = = = Current liabilities
H \quad = = = Net income
I \quad = = = Inventory, beginning
J \quad = = = Property, plant, and equipment
K \quad = = = Prepaid insurance
L \quad = = = Common dividends
M \quad = = = Long-term liabilities
N \quad = = = Interest expense
O \quad = = = Inventory, ending
P \quad = = = Preferred dividends
Q \quad = = = Investment in stock of subsidiary
T \quad = = = Pretax operating income Required:
Use the letters above to indicate how the following ratios would be calculated:
a. Debtratio
b. Inventary tumover
c. Quick ratio
d. Earnings per share
e. Cash flows from operations to net income
Debt Ratio
A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.
Inventory Turnover
A measure of how many times a company's inventory is sold and replaced over a period, indicating the efficiency of the company in managing and selling its stock.
Quick Ratio
A liquidity ratio that measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.
- Perform calculations and provide interpretations for financial ratios like price/earnings ratio, dividend yield, profit margin, return on total assets, current ratio, inventory turnover, and debt ratio.
- Employ and assess cash flow ratios and turnover figures to evaluate a company's operational effectiveness.
Verified Answer
b. D(I+O)/2\frac{D}{(I+O) / 2}(I+O)/2D
c. B+FG\frac{B+F}{G}GB+F
d. H−PE\frac{H-P}{E}EH−P
e. CH\frac{\mathrm{C}}{\mathrm{H}}HC
Learning Objectives
- Perform calculations and provide interpretations for financial ratios like price/earnings ratio, dividend yield, profit margin, return on total assets, current ratio, inventory turnover, and debt ratio.
- Employ and assess cash flow ratios and turnover figures to evaluate a company's operational effectiveness.
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