Learning Materials
Features
Discover
Chapter 15: 8RQ (page 835)
Briefly describe the ratios that can be used to evaluate a company’s ability to paycurrent liabilities.
Working capital,
Current ratio,
Quick ratio
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Data for Research Enterprises follows:
2019 | 2018 | 2017 | |
Total current assets | \(490,000 | \)320,000 | \(230,000 |
Total current liabilities | \)235,000 | \(160,000 | \)115,000 |
Compute the dollar amount of change and the percentage of change in Research Enterprises’ working capital each year during 2019 and 2018. What do the calculated changes indicate?
Data for Oxford State Bank follow:
2018 | 2017 | |
Net Income | \(71,900 | \)64,300 |
Dividends—Common | 22,000 | 22,000 |
Dividends—Preferred | 16,800 | 16,800 |
Total Stockholders’ Equity at Year-End (includes 95,000 shares of common stock) | 770,000 | 610,000 |
Net Income | \( 71,900 | \) 64,300 |
Market Price per Share of Common Stock | \( 16.50 | \) 10.00 |
Evaluate the common stock of Oxford State Bank as an investment. Specifically,
use the three stock ratios to determine whether the common stock has increased or decreased in attractiveness during the past year. Round to two decimal places.
Data for Mulberry Designs, Inc. follow:
Requirements
1. Prepare a horizontal analysis of the comparative income statement of Mulberry
Designs, Inc. Round percentage changes to one decimal place.
2. Why did 2018 net income increase by a higher percentage than net sales
revenue?
Determining the effects of business transactions on selected ratios
Financial statement data of Modern Traveler’s Magazine include the following items:
Cash | \(19,000 |
Accounts Receivable, Net | 82,000 |
Merchandise Inventory | 183,000 |
Total Assets | 638,000 |
Accounts Payable | 102,000 |
Accrued Liabilities | 35,000 |
Short-term Notes Payable | 50,000 |
Long-term Liabilities | 221,000 |
Net Income | 69,000 |
Common Shares Outstanding | 50,000 shares |
Requirements
Current ratio | Debt ratio | Earnings per share |
2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Purchased merchandise inventory of \)42,000 on account.
b. Borrowed \(121,000 on a long-term note payable.
c. Issued 5,000 shares of common stock, receiving cash of \)103,000.
d. Received cash on account, $5,000.
Grand Oaks Realty’s net revenue & net income for the following five-year period using 2015 as the base year, follow:
Requirement:
Compute a trend analysis for the net revenue & net income. Round to the nearest full percent.
Which grew faster during the period, net revenue or the net income?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App