BE310 Financial Accounting
Assignment 5
1. Below are comparative balance sheets and an income statement for Claret Corporation.
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All sales were made on account. Cash dividends declared during the year totaled $11,492.
Answer the following ((a) through (e))based on the above information
a. Claret Corporation’s accounts receivable turnover for 2009 is:
A. 4.6 times.
B. 2.9 times.
C. 5.4 times.
D. 68 days.
b. Claret Corporation’s inventory turnover for 2009 is:
A. 6.6 times.
B. 3.9 times.
C. 4.2 times.
D. 94 days.
c. Claret Corporation’s gross profit rate for 2009 is:
A. 60.1%.
B. 39.9%.
C. 33%.
D. 68%
d. Claret Corporation’s return on assets for 2009 rounded to the nearest tenth of a percent is:
A. 9.9%.
B. 4.1%.
C. 5.9%.
D. 16.9%.
e. Claret Corporation’s return on common stockholders’ equity for 2009, rounded to the nearest tenth of a percent, is:
A. 5.9%.
B. 6.05%.
C. 14.4%.
D. 9.4%.
2. Measures of solvency and credit risk
Shown below are selected items appearing in a recent balance sheet of Grant Products. (Dollar amounts are in thousands.)
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(a) Compute the following:
(1) Total quick assets $____________
(2) Total current assets $____________
(3) Total current liabilities $____________
(4) Quick ratio ______ to 1
(5) Current ratio ______ to 1
(b) Research indicates an industry average quick ratio is 1.3 to 1, and a current ratio of 2.3 to 1. Based upon this information, does Grant Products appear more or less solvent than the average company in its industry? Explain briefly.
3. Computation of profitability ratios
Shown below are selected data from a recent annual report of Tall Oaks Co. (Dollar amounts are in thousands.)
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Compute for the year the company’s:
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4. (a) Define (a) profitability, (b) liquidity and (c) solvency
(b) List (a) 3 profitability ratios, (b) 3 liquidity ratios, (c) 3 solvency ratios
(a) Describe the calculation of each ratio listed above for profitability, liquidity and solvency
5. Percentage changes (BONUS -5 points)
Selected information from the financial statements of Perfectly Baked Cake Co. appears below:
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(a) Compute the percentage change in each of the above items from 2010 to 2011. Use a + or – to indicate increase or decrease.
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(b) Compute net income as a percentage of net sales in each year. (Round to the nearest one-tenth of 1%)
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