The Following Data Are Taken from the Financial Statements of Edington

question 87

Essay

The following data are taken from the financial statements of Edington Company. The data are in alphabetical order. $\begin{array}{lrlr}\text { Accounts payable } & \$ 28,000 & \text { Net sales } & 500,000 \\\text { Accounts receivable } & 65,000 & \text { Other current liabilities } & 20,000 \\\text { Average common shares out. } & 20,000 & \text { Salaries and wages payable } & 7,000 \\\text { Cash } & 56,000 & \text { Stockholders' equity } & 135,000 \\\text { Gross profit } & 190,000 & \text { Total assets } & 300,000\\\text { Net income } \quad 50,000\end{array}$ Instructions
Compute the following:
(a) Current ratio. (c) Earnings per share.
(b) Working capital. (d) Debt to assets ratio.

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Definitions:

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.

Break-even Point

The production level or sales volume at which total revenues equal total costs, resulting in no profit or loss.

Variable Costs

Costs that vary directly with the level of production or the volume of output.

Fixed Costs

Costs including rent, salaries, and insurance that stay the same regardless of production or sales amounts.