Using the Following Amounts Taken from the Balance Sheet and Income

question 107

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.
$\begin{array}{lrlr}\text { Current assets } & \$ 30,000 & \text { Average owner's equity } & \$ 60,000 \\\text { Average total assets } & 120,000 & \text { Net sales } & 64,000 \\\text { Current liabilities } & 20,000 & \text { Net income } & 3,000 \\\text { Long-term liabilities } & 40,000 & &\end{array}$
a. Current ratio
b. Return on equity
c. Return on assets
d. Working capital

---

Definitions:

Finishing Department

The sector in a manufacturing process where products undergo final treatments, such as polishing, painting, or packaging, before being sold or shipped.

Predetermined Overhead Rate

A calculated rate used to assign manufacturing overhead costs to individual products, based on estimated or known factors.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process or delivery of services.

Machine-Hours

The total number of hours that machinery is in operation during a specific period.