Using the Following Amounts Taken from the Balance Sheet and Income

question 17

Essay

Using the following amounts taken from the balance sheet and income statement of a business,compute the measures listed below.After each answer,write "L" if it is a measure of liquidity or "P" if it is a measure of profitability.Round to two decimal places.
$$\begin{array} { l r l r } \text { Current assets } & 30,000 & \text { Average stacknolders' eqquty } \\\text { Average total as5ets } & 120,000 & \text { Net sales } \\\text { Curent labilities } & 20,000 & \text { Net income } \\\text { Long-term liabilities } & 40,000 &\end{array}$$
a. Current ratio
b. Return on equity
c. Return on assets
d. Working capital

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Definitions:

AGI Deduction

Deductions that can be taken from gross income to arrive at the Adjusted Gross Income, which is used as a basis for calculating taxable income.

Art Supplies

Materials and tools used in the creation of artwork, the costs of which may be tax-deductible for professional artists or educators under certain conditions.

Home Schooling

Education where children are taught at home, typically by parents or tutors, instead of in a traditional public or private school setting.

Education Expense Deduction

A tax deduction allowing taxpayers to deduct eligible schooling and educational costs, lowering their taxable income.