Question

Delta Inc. has provided the following information from its most recent financial statements. Total revenue $150,000...

Delta Inc. has provided the following information from its most recent financial statements.

Total revenue $150,000
Total expenses 96,000
Total current assets 38,400
Total current liabilities 9,600
Total stockholders' equity, previous year 88,800
Total stockholders' equity, current year 91.200

Use the above to answer the following three questions.

1) Compute Delta's net income percentage in the current year.

Express percentages as a decimal. For example, 52.3% would be .523.

If the answer is NOT a percentage, round to one decimal. For example 52.2789 would be 52.3.

2) Compute Delta's return on equity in the current year.

Express percentages as a decimal. For example, 52.3% would be .523.

If the answer is NOT a percentage, round to one decimal. For example 52.2789 would be 52.3.

3)   Compute Delta's current ratio at December 31, current year.

Express percentages as a decimal. For example, 52.3% would be .523.

If the answer is NOT a percentage, round to one decimal. For example 52.2789 would be 52.3.

Business   Accounting   
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Homework Answers

Answer #1

For Delta Inc.

1. Computation of Net Income percentage in the current year

Net income % = [Net income (Total revenue-Total expenses) / Total Revenue]*100

= [(150000-96000) / 150000]*100

= 54000/150000*100

= 36% = 0.36 times ot total revene

2. Return on equity in the current year:

Return on Equity = [Net income / Average Shareholder's equity]

= 54000/ (88800+91200)/2

= 54000/90000

= 0.6 per share value

3. Current Ratio in the current year:

Current ratio = Total Assets/Total liabilities

= 38400/9600

= 4 times

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