Question

The condensed financial statements of Marks Company for the years 2017-2018 are presented below:

Marks Company

Comparative Balance Sheets

As of December 31, 2017 and 2018

                                                                                                          2018                      2017                                                                                             

Cash                                                                                              $   630,000    $   180,000

Accounts receivable (net)                                                                  540,000         450,000

Inventories                                                                                         570,000         510,000

Plant and equipment                                                                       2,700,000      1,608,000

Accumulated depreciation                                                                 (390,000)    (228,000)

                                                                                                      $4,050,000    $2,520,000

Accounts payable                                                                          $   510,000    $   240,000

Dividends payable                                                                                   -0-              60,000

Bonds payable                                                                                   600,000                 -0-

Common stock ($10 par)                                                                2,280,000      1,800,000

Retained earnings                                                                             660,000         420,000

                                                                                                      $4,050,000    $2,520,000

Additional data:

            Market value of stock at 12/31/18 is $80 per share.

            Marks sold 48,000 shares of common stock at par on July 1, 2018.

Marks Company

Condensed Income Statement

For the Year Ended December 31, 2018

         Sales revenue                                                                            $3,600,000

         Cost of goods sold                                                                       2,475,000

         Gross profit                                                                                  1,125,000

         Administrative and selling expenses                                              750,000

         Net income                                                                                 $   375,000

Compute the following financial ratios by placing the proper amounts in the parentheses provided for numerators and denominators.

Current ratio at 12/31/18 (                       )

                                                                                                          

Acid test ratio at 12/31/18 (                       )

  

Accounts receivable turnover in 2018 (                       )

                                                                                                           

Inventory turnover in 2018 (                       )

  

Profit margin on sales in 2018 (                       )

Answer 1

	Current Ratio	Current Assets/Current Liabilites	1740000/510000	3.4 Times
	ACID TEST RATIO	Quick Assets/Current Liabilities	1170000/510000	2.3 Times
	Accounts Receivable Turnover	Sales/Average Receivables	3600000/495000	7.27 Times
	Inventory Tunrover	Cost of Goods Sold/Average Inventory	2475000/540000	4.58
	Profit Margin On sales	Net Income/Sales*100%	375000/3600000*100%	10.42%
	Note:Quick Assets=Cash +Marketable Securities/Short term Investments +Accounts Receivables