question archive Flynn Plastics Company reports the following data in its May 30, 2020 financial statements: Gross sales $225,000 Current assets $ 40,000 Long-term assets $100,000 Current liabilities $16,000 Long-term liabilities $44,000 Owners' equity $80,000 Net income $7,200 Number of common shares 5,000 Compute the following ratios: current ratio , debt-to-equity , return on owners’ equity , and earnings per share
Flynn Plastics Company reports the following data in its May 30, 2020 financial statements: Gross sales $225,000 Current assets $ 40,000 Long-term assets $100,000 Current liabilities $16,000 Long-term liabilities $44,000 Owners' equity $80,000 Net income $7,200 Number of common shares 5,000 Compute the following ratios: current ratio , debt-to-equity , return on owners’ equity , and earnings per share
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Flynn Plastics Company reports the following data in its May 30, 2020 financial statements:
Gross sales $225,000
Current assets $ 40,000
Long-term assets $100,000
Current liabilities $16,000
Long-term liabilities $44,000
Owners' equity $80,000
Net income $7,200
Number of common shares 5,000
Compute the following ratios: current ratio , debt-to-equity , return on owners’ equity , and earnings per share .
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Answer:
Calculation of Ratios
A) Current Ratio= Current Assets/ Current Liabilities
Current Ratio= 40000/16000 = 2.5 times
B)Debt to Equity Ratio =( Current Liabilities + Long term liabilities)/ Owners Equity
Debt to Equity Ratio =(16000+ 44000)/80000
Debt to Equity Ratio =0.75
C)Return on Owners Equity =Net Income/ Owners Equity*100
Return on Owners Equity =7200/80000*100
Return on Owners Equity =9%
D)Earnings per share = Net Income/ Number of Common shares
Earnings per share =7200/5000
Earnings per share =1.44 per share
