Financial Ratios
Shown Below Are Some Key Figures from the Balance

question 129

Essay

Financial ratios
Shown below are some key figures from the balance sheets of Minuteman Gas Company for two successive years:
$\begin{array}{|l|r|r|} \hline& \text { December } 31,2010 & \text { December } 31,2009 \\\hline \text { Total assets (of which } 30 \% \text { are current) } & \$ 2,820,000 & \$ 2,220,000 \\\hline \text { Current liabilities } & \$ 336,000 & \$ 372,000 \\\hline \text { Bonds payable (long term) } & \$ 1,080,000 & \$ 840,000 \\\hline \text { Share capital, } \$ 6 \text { par value } & \$ 660,000 & \$ 660,000 \\\hline \text { Retained Earnings } & \$ 828,000 & \$ 480,000\\\hline\end{array}$ Dividends of $96,000 were declared and paid in 2010. Compute the following: $$\begin{array} { | l | l | } \hline \text { Current ratio at end of } 2009 &\quad\quad \\\hline \text { Current ratio at end of } 2010 & \\\hline \text { Working capital at end of } 2009 & \\\hline \text { Working capital at end of } 2010 & \\\hline \text { Debt ratio at end of } 2009 & \\\hline \text { Debt ratio at end of } 2010 & \\\hline \text { Earnings per share for } 2010 & \\\hline\end{array}$$

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.

Cost of Goods Available for Sale

The total cost of merchandise that a company can sell during a certain period, including both the cost of goods purchased and the cost of goods manufactured.

Cash Flows

A financial statement segment that shows how changes in balance sheet accounts and income affect cash and cash equivalents, categorizing flows into operating, investing, and financing activities.