Question

Compute Profit margin, current ratio, debt to asset, and asset turnover ratios. Balance Sheet As on...

Compute Profit margin, current ratio, debt to asset, and asset turnover ratios.
Balance Sheet
As on April 30
$ $
ASSETS
Lanscaping Equipment 15,000
Cash 55,300
Prepaid Insurance 3,300
Landscaping supplies 300
Accounts Receivable 600
Total Assets 74,500
Equity and Liabilities
Equity
Common Stock 50,000
Retained Earnings 20,750
Total Equity 70,750
Liabilities
Accounts Payable 3,750
Total Equity and Liabilities 74,500
Business   Accounting   
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Homework Answers

Answer #1

Current Ratio = Current Assets / Current Liabilities
Current Ratio = (55300+3300+300+600) / (3750)
Current Ratio = 15.87 times

Debt to asset = Total Liabilities / Total Asset
Debt to asset = 3750 / 74500
Debt to asset = 0.0503 or 5.03%

Profit margin can not be calculated using balance sheet data, it requires statement of profit and loss.

Asset turnover ratio = Net sales / Average total assets
(Average total assets can be taken as Total asset in formula if previous year data is not available)
As sales value is not available, this also cannot be caculated.

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