Balance sheet and income statement using financial ratios

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Reference no: EM1313787

Calculating the approximate amounts for the current year\'s balances in the form of a balance sheet and income statement using financial ratios.

Reflect the relationships maintained by convington pike in recent years

Profit margin on sales =5%

return on assets =7.5%

Gross profit margin =40%

inventory turnover ratio = 6times

receivables turnover ratio = 25

acid- test ratio = .9

current ratio = 2 to 1

return on shareholders\' equity = 10%

debt to equity ratio = 1/3

times interest earned ratio = 12 times

jotted in the margins are the following notes:

net income $15,000

Only one short-term not (5,000); all other current Liabilities are trade accounts

property, plant, and equipment are the only noncurrent assets

bond payable are the only noncurrent liabilities

the effective interest rate on short - term notes and bonds is 8%

no investment securities

Cash balance totals $15,000

required:

you are requested to approximate the current year\'s balances in the form of a balance sheet and income statement, to the extent the information allows. Accompany those financial statement with the calculations you used to estimate each amount reported.

Reference no: EM1313787

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