The Following Information Is Available for Ward Company Required:
Compute the Following Ratios:
A) Current Ratio
B)

question 11

Essay

The following information is available for Ward Company:
$\begin{array} { l } \text { Sales }&\$189,400\\\text { Gross profit } & \$ 56,400 \\\text { Net income } & \$ 25,800 \\\text { Total current assets } & \$ 32,400 \\\text { Total current liabilities } & \$ 34,400\\ \text { Total stockholders' equity, last year }&\$192,000\\ \text {Total stockholders' equity, current year }&\$280,000\\\end{array}$

Required:
Compute the following ratios:
A) Current ratio
B) Gross profit rate
C) Return on sales
D) Return on stockholders' equity

• A) Current ratio
• B) Gross profit rate
• C) Return on sales
• D) Return on stockholders' equity

Describe the importance of internal controls during a physical inventory count.

Discuss the LIFO conformity rule and its implications for financial reporting.

Analyze inventory management effectiveness using inventory turnover ratio and days' sales in inventory ratio.

Explain the impact of an error in ending inventory balance on income statement accounts.

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Definitions:

Long-Run Equilibrium

A state where all factors of production in an economy are fully adjusted to market conditions, leading to stable prices and full employment of resources.

Profit Maximization

The method a company uses to decide the price and production amount that yields the highest profit.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing the excess earnings over the next best alternative.

Monopolistic Competition

A trading structure inhabited by many corporations pushing products that are analogous but not carbon copies, which affords them a degree of control over the market.