E13-18B (Ratio Computations and Analysis) HQ Company’s condensed financial statements provide the following information. HQ COMPANY BALANCE SHEET Dec. 31, 2014 Dec. 31, 2013 Cash $ 8,000 $ 25,000 Accounts receivable (net) 151,000 112,000 Short-term invest
mujionostevoE13-18B (Ratio Computations and Analysis) HQ Company’s condensed financial statements provide the following information.
HQ COMPANY
BALANCE SHEET
Dec. 31, 2014 Dec. 31, 2013
Cash $ 8,000 $ 25,000
Accounts receivable (net) 151,000 112,000
Short-term investments 50,000 31,000
Inventories 300,000 268,000
Prepaid expenses 12,000 9,000
Total current assets $521,000 $445,000
Property, and equipment (net) 460,000 420,000
Total assets $981,000 $865,000
Current liabilities 277,000 201,000
Bonds payable 250,000 260,000
Common stockholders’ equity 454,000 404,000
Total liabilities and’ equity $981,000 $865,000
INCOME STATEMENT
FOR THE YEAR ENDED 2014
Sales $2,608,000
Cost of goods sold (1,673,000)
Gross profit 935,000
Selling and administrative expense (581,000)
Interest expense (26,000)
Net income $ 328,000
Instructions
(a) Determine the following for 2014.
(1) Current ratio at December 31.
(2) Acid-test ratio at December 31.
(3) Accounts receivable turnover.
(4) Inventory turnover.
(5) Rate of return on assets.
(6) Profit margin on sales.
(b) Prepare a brief evaluation of the financial condition of HQ Company and of the adequacy of its profits.
12 years ago
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