prepaid rent\nlong - term assets:\n investment in bonds\n land\n equipment\n less: accumulated…
prepaid rent\nlong - term assets:\n investment in bonds\n land\n equipment\n less: accumulated depreciation\n total assets\nliabilities and stockholders’ equity\ncurrent liabilities:\n accounts payable\n interest payable\n income tax payable\nlong - term liabilities:\n notes payable\nstockholders’ equity:\n common stock\n retained earnings\n total liabilities and stockholders’ equity\nrequired:\n1. assuming that all sales were on account, calculate the following asset management and risk ratios for 2025 and 2024:\nnote: round your answers to 1 decimal place.\n\n| |2025|2024|\n|--|--|--|\n|receivables turnover ratio|times|times|\n|inventory turnover ratio|times|times|\n|current ratio|to 1|to 1|\n|debt to equity ratio|%|%|\n
Answer
Explanation:
Step1: Recall formula for receivables turnover ratio
Receivables turnover ratio = Net credit sales / Average accounts - receivable. Since net - credit sales are not given in the problem, we cannot calculate this ratio with the provided data.
Step2: Recall formula for inventory turnover ratio
Inventory turnover ratio = Cost of goods sold / Average inventory. Cost of goods sold is not given in the problem, so we cannot calculate this ratio.
Step3: Calculate current ratio for 2025
Current ratio = Current assets / Current liabilities. Current assets data is not given. Current liabilities in 2025: Accounts payable ($161,400)+Interest payable ($9,900)+Income tax payable ($12,300) = $183,600. Without current assets, we cannot calculate.
Step4: Calculate current ratio for 2024
Current liabilities in 2024: Accounts payable ($69,000)+Interest payable ($6,600)+Income tax payable ($16,500) = $92,100. Without current assets, we cannot calculate.
Step5: Calculate debt - to - equity ratio for 2025
Total liabilities in 2025 = Current liabilities ($183,600)+Long - term liabilities (Notes payable $430,000) = $613,600. Stockholders' equity in 2025 = Common stock ($303,000)+Retained earnings ($119,700) = $422,700. Debt - to - equity ratio = (Total liabilities / Stockholders' equity) * 100% = ($613,600 / $422,700)*100%≈145.1%
Step6: Calculate debt - to - equity ratio for 2024
Total liabilities in 2024 = Current liabilities ($92,100)+Long - term liabilities (Notes payable $288,000) = $380,100. Stockholders' equity in 2024 = Common stock ($303,000)+Retained earnings ($230,700) = $533,700. Debt - to - equity ratio = (Total liabilities / Stockholders' equity) * 100% = ($380,100 / $533,700)*100%≈71.2%
Answer:
| Ratio | 2025 | 2024 |
|---|---|---|
| Receivables turnover ratio | Cannot be calculated | Cannot be calculated |
| Inventory turnover ratio | Cannot be calculated | Cannot be calculated |
| Current ratio | Cannot be calculated | Cannot be calculated |
| Debt to equity ratio | 145.1% | 71.2% |