Solution-Calculate the times interest earned and current

Calculate the times interest earned and current ratio

Assignment Help Accounting Basics

Reference no: EM131761595

Problem - Use the attached Balance Sheet and Income Statement to calculate the following ratios

Current ratio
Quick ratio
Average Collection Period
Inventory Turnover
Fixed Asset Turnover
Total Asset Turnover
Debt Ratio
Times Interest Earned
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Return on Total Assets
Return on Equity

ABC Company Balance Sheet December 31, 2016
Assets		Liabilities
Cash	$125,000	Accounts Payable	$150,000
Accounts Receivable	275,000	Notes Payable	225,000
Inventory	325,000	Accrued Liabilities	100,000
Current Assets	725,000	Current Liabilities	475,000

Fixed Assets (net)	420,000	Long-term Debt	405,000
		Total liabilities	$875,000
		Equity	270,000
Total Assets	$1,145,000	Total Liabilities & Equity	$1,145,000

ABC Company Income Statement For the year ended December 31, 2017


Sales Revenue	$1,500,000
Cost of Goods Sold	1,200,000
Gross Profit	300,000
Operating Expenses	100,000
Operating Profit	200,000
Interest Expense	72,000
Earnings before Tax	128,000
Income Tax (40%)	51,200
Net Income	$ 76,800

Reference no: EM131761595

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Calculate the times interest earned and current ratio

Reference no: EM131761595

Reference no: EM131761595

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