Compute the liquidity measures

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Question - A summary of data from the income statement and balance sheets for Roman Constructions Supply Company for 2011 and 2010 appears below.

 

2011

2010

Current assets

$183,000

$155,000

Total assets

1,160,000

870,000

Current liabilities

90,000

60,000

Long-term liabilities

400,000

290,000

Owner's equity

670,000

520,000

Net sales

2,300,000

1,740,000

Net income

150,000

102,000

Total assets owner's equity at the beginning of 2010 were $680,000 and $420,000, respectively.

Required -

1. Compute the following liquidity measures for 2010 and 2011: (a) working capital and (b) current ratio. Comment on the differences between the years.

2. Compute the following measures of profitability for 2010 and 2011: (a) profit margin, (b) asset turnover, (c) return on assets, (d) debt to equity ratio, and (e) return on equity. Comment on the change in performance from 2010 to 2011.

Reference no: EM132597618

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