Financial Ratios
Given Below Are Comparative Balance Sheets and an Income

question 50

Essay

Financial ratios
Given below are comparative balance sheets and an income statement for the Excellent Corporation:
All sales were made on account. Cash dividends declared during the year totaled $58,550. Compute the following:
$$\begin{array} { | l | l| } \hline \text { (a) Average accounts receivable turnover } & \underline{\quad\quad}\text { times } \\\hline \text { (b) Average inventory turnover } & \underline{\quad\quad}\text { times } \\\hline \text { (c) Earnings per share of capital stock } & \$\underline{\quad\quad} \\\hline \text { (d) Book value per share of capital stock at year-end } &\$\underline{\quad\quad} \\\hline \text { (e) Current ratio at year-end } &\underline{\quad\quad}\text { to } 1 \\\hline \text { (f) Quick ratio at beginning of year } &\underline{\quad\quad} \text { to } 1 \\\hline \text { (g) Debt ratio at year-end } & \underline{\quad\quad}\% \\\hline \text { (h) Operating expense ratio } &\underline{\quad\quad} \% \\\hline \text { (i) Return on assets } &\underline{\quad\quad} \% \\\hline \text { (j) Return on common stockholders' equity } &\underline{\quad\quad} \% \\\hline \end{array}$$

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace on deposits, debts, or loans.

Nominal Rate

The Nominal Rate is the interest rate stated on a loan or financial product, not taking into account inflation or other factors that could affect the real value of the interest.

Premium

An amount paid in excess of a standard price or value, often related to insurance policies, bonds above par, or quality products.

Annual Amortization

The process of spreading out a loan or intangible asset cost over a specific period of time for accounting and tax purposes.