(Solution) -ACC 205 Week 5 Assignment Student Guidance Report Updated
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ACC 205 Week 5 Assignment Student Guidance Report
Chapter 9 Exercise 3
Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
Suppose Thornton is using FIFO for inventory valuation and Edison is using LIFO. Comment on the comparability of information between these two companies.
If all short-term notes payable are due on July 11 at 8 a.m., comment on each company's ability to settle its obligation in a timely manner.
Chapter 9 Exercise 4
Computation and evaluation of activity ratios. The following data relate to Alaska Products Inc.:
The company is planning to borrow $300,000 via a 90-day bank loan to cover short-term operating needs.
Compute the accounts-receivable and inventory-turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
Study the ratios from part (a) and comment on the company's ability to repay a bank loan in 90 days.
Suppose that Alaska's major line of business involves the processing and distribution of fresh and frozen fish throughout the United States. Do you have any concerns about the company's inventory-turnover ratio? Briefly discuss.
Chapter 9 Problem 1
Horizontal and vertical analysis. The following financial statements pertain to Waterloo Corporation:
Prepare a horizontal analysis of the balance sheet, showing dollar and percentage changes. Round all calculations in parts (a) and (b) to two decimal places.
Prepare a vertical analysis of the income statement by relating each item to net sales.
Briefly comment on the results of your analysis.
Chapter 9 Problem 2
Ratio computation. The financial statements of the Lone Pine Company follow.
Compute the following items for Lone Pine Company for 20X2, rounding all calculations to two decimal places when necessary:
Number of times that interest is earned
Dividend payout rate
Chapter 9 Problem 3
Financial statement construction via ratios. Incomplete financial statements of Lock Box Inc. are presented as follows:
Further information is the following:
Cost of goods sold is 60% of sales. All sales are on account.
The company's beginning inventory is $5 million; inventory-turnover ratio is 4.
The debt-to-total-assets ratio is 70%.
The profit margin on sales is 6%.
The firm's accounts-receivable-turnover ratio is 5. Receivables increased by $400,000 during the year.
Using the preceding data, complete the income statement and the balance sheet.