## [solution]: You had answered my question on ratio analysis and this is the

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You  had answered my question on ratio analysis and this is the feed back i got back from the teacher. Please assist me here

Teacher's feedback below:

thanks for sending this to me. I did get a chance to take a look at things and have some questions.

For your long-term debt ratio in question 11, double-check your work. The formula us Long Term Debt / (Long Term Debt + Total Equity).

For your inventory turnover ratio in 12, the formula is sales/inventory. Please take another look.

For 14, net working capital please take another look at the numbers you put into the formula. They are off a bit.

16 - Return on Sales = Net Income/Sales.

For numbers 19 and 20, I know it said answer Y/N. I just want to make sure you know why this is the case. Are there particular things that made you believe this from the numbers you calculated in this assignment? If so, what are they specifically? Can you share that?

Fin 300

Ratio Analysis Assignment

Background information and questions for Assignment B

Rearrange this data into the Balance Sheet and P&amp;L statement below.

Place the data into these financial statements:

Buildings

10,000

Mortgage

100

Cash

2,000

Accounts Payable

1,000

Short Term Loan

900

Accounts Receivable

500

Machinery &amp; Equipment

1,800

Inventory

1,500

Long Term Loan

5,000

SG&amp;A

150

Sales

3,000

Depreciation

30

Cost of Goods

2,100

Interest Expense

100

Taxes

200

Note for the financial statements below:

(The calculations that need to be made are noted in BOLD on the statements)

On the P&amp;L Net Income must be calculated.

On the Balance Sheet Shareholders' Equity, Total Current Assets &amp; Fixed Assets, Total Current

and Total Long Term Liabilities &amp; Total Assets and Total Liabilities &amp; Equity must be calculated.

Use these answers to complete Answer Sheet for Review Test B in the Item below.

You will also use these numbers to calculate the financial ratios in the online review

test/assignment.

BALANCE

SHEET

Cash

Accounts

Receivable

Inventory

Current

Assets

Buildings

Machinery

&amp;

Equipment

Fixed Assets

Total Assets

Accounts

Payable

Short Term

500

Loan

Current

1,500

Liabilities

2,000

4,000 Mortgage

900

1,900

100

10,000

Long Term

Loan

5,000

1,800

Long Term

Liabilities

5,100

Shareholders'

Equity

8,800

11,800

Total

15,800 Liabilities &amp;

Equity

P&amp;L (aka

Income

Statement)

Sales

3,000

Cost of Goods

2,100

Gross Margin

(Gross Profit)

SG&amp;A

Depreciation

expenses

Operating Profit

Interest expense

Taxes

Net Income

1,000

900

150

30

720

100

200

420

15,800

Questions to answer (the same questions you will encounter when you open up your

Assignment Manager (for P&amp;L) to turn it in)

Question 1 7 points

What is the value of NET INCOME?

420

Question 2 5 points

What is the value of CURRENT ASSETS?

4,000

Question 3 5 points

What is the value of FIXED ASSETS?

11,800

Question 4 5 points

What is the value of CURRENT LIABILITIES?

1,900

Question 5 5 points

What is the value of LONG TERM LIABILITIES?

5,100

Question 6 5 points

What is the value of SHAREHOLDERS' EQUITY?

8,800

Question 7 5 points

What is the value of TOTAL LIABILITIES &amp; EQUITY?

15,800

Question 8 4 points

Using what you calculated so far what is the CURRENT RATIO?

Current ratio = Current Assets/Current Liabilities

=4,000/1,900 = 2.11

Question 9 4 points

What is the QUICK or ACID TEST RATIO?

Quick Ratio = (Cash+ Cash Equivalents+ Short-term investments)/ Current liabilities

= (2,000+500)/1,900 = 1.32

Question 10 4 points

What is the TOTAL DEBT RATIO?

Total Debt Ratio = Total Liabilities/Total Assets

= (1,900+5,100)/15,800

=0.44

Question 11 4 points

What is the LONG TERM DEBT RATIO?

Long term debt ratio = Long term liabilities/Total Assets

=5,100/15,800 = 0.32

Question 12 4 points

What is the INVENTORY TURNOVER RATIO?

Inventory turnover ratio = Cost of goods sold/ Inventory

=2,100/1,500= 1.4

Question 13 6 points

What are the DAYS OF SALES IN RECEIVABLES?

Days of sales in receivables = accounts receivable / average sales per day

Assumption: 365 Days in a year

=500/(3,000/365) = 60.83 Days

Question 14 4 points

What is the value of NET WORKING CAPITAL?

Working Capital = current assets (cash, inventory, a/r) - current liabilities (a/p, short term debt)

Net working capital is similar to working capital but removes the cash and debt consideration

and simplifies the formula to a/r and inventory minus a/p.

Net working capital = 500+1,500- 1,000 = 1,000

Question 15 4 points

What is TOTAL ASSET TURNOVER?

Total Asset Turnover = Sales/Total Assets

=3,000/15,800 = 0.1898/18.98%

Question 16 4 points

What is this firm's RETURN ON SALES (ROS)?

ROS = Operating Income/ Sales =

=720/3,000 = 0.24/24%

Question 17 4 points

What is the firm's RETURN ON ASSETS?

ROA = Net Income/Total Assets

=420/15,800 = 0.0266/2.66%

Question 18 4 points

What is this firm's RETURN ON EQUITY?

ROE= Net Income/ Shareholders Equity

=420/8,800 = 0.0477/4.77%

Question 19 9 points

As a result of your analyses do you believe this is a firm that will stay in business? Please look at

your results for all ratios in this case along with the ratio interpretation sheet I showed you in

class. Then, simply answer YES or NO.

YES

Question 20 8 points

From the limited amount of data and analysis is this is a &quot;reasonably well run company&quot; that is

managing its finances well? Answer YES or NO

YES

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