Question

left column is for 2012 and right column is for 2013     Assets   2012    2013 Cash...

left column is for 2012 and right column is for 2013

    Assets   2012    2013

Cash ..................................................................................................    $ 20,000 $ 60,000

Accounts receivable (net) .................................................................        30,000      50,000

Inventory ...........................................................................................        20,000      30,000

Property, plant and equipment (net) .................................................      170,000 220,000

      Total assets .................................................................................    $240,000   $360,000

  Liabilities

Current liabilities ..............................................................................    $ 40,000 $ 60,000

Long-term liabilities .........................................................................        70,000 100,000

  Owners’ Equity

Common Stock .................................................................................      100,000    120,000

Retained Earnings .............................................................................      30,000      80,000

      Total liabilities and owners’ equity ............................................    $240,000 $360,000

Net sales ............................................................................................                     $500,000

Cost of goods sold ............................................................................                       280,000

Gross profit .......................................................................................                       220,000

Operating expenses ...........................................................................                      160,000

Net income ........................................................................................                      $ 60,000

What is the return on assets in 2013?

a.

16.7%

b.

20.0%

c.

22.5%

d.

10.0%

What is debt to equity in 2013?

a.

44.4%

b.

45.8%

c.

80.0%

d.

84.6%

What is the return on equity in 2013?

a.

40.0%

b.

36.4%

c.

30.0%

d.

51.2%

What is the current ratio in 2013?

a.

1.83

b.

2.50

c.

2.33

d.

2.00
Business   Accounting   
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Homework Answers

Answer #1
Return on assets = Net Income / Average Total Assets
Return on assets = $60,000 / (($240,000+$360,000)/2)
Return on assets = 20%
Debt to equity ratio = Total liabilities / Total Equity
Debt to equity ratio = ($60,000+$100,000) / ($120,000+$80,000)
Debt to equity ratio = 80%
Return on equity = Net income / Average Stockholders equity
Return on equity = $60,000 / (($100,000+$30,000+$120,000+$80,000)/2)
Return on equity = 36.4%
Current ratio = Current assets / Current liabilities
Current ratio = ($60,000+$50,000+$30,000) / 60,000
Current ratio = 2.33

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