Exam 2: A Further Look at Financial Statements

Bathlinks Corporation has a debt to assets ratio of 73%.This tells the user of Bathlinks's financial statements that

Profitability ratios measure the operating success of a company for a given period of time.

What is the order in which assets are generally listed on a classified balance sheet?

Use the following data to determine the total amount of working capital. Edie's Flomer Shoppe Balance Sheet December 31,2022 Cash \ 126,000 Accounts receivable 120,000 Inventory 210,000 Prepaid insurance 90,000 Stock investments 255,000 Land 285,000 Buildings \ 339,000 Less: Accumulated depreciation (60,000) 279,000 Trademarks 210,000 Total assets \ 1575,000 Accounts payable \ 165,000 Salaries and wages payable 30,000 Mortgage payable 270,000 Total liabilities 465,000 Common stock \ 360,000 Retained earnings 750,000 Total stockholders' equity 1,110,000 Total liabilities and stockholders' equity \ 1,575,000

The current ratio is current assets less accounts payable.

A liability is classified as a current liability if it is to be paid within the coming year.

How can a company improve its current ratio?

Use the following data to calculate working capital. . Drew's Lawn Service Balance Sheet December 31,2022 Cash \ 2,000 Accounts receivable 300 Supplies 100 Prepaid insurance 900 Equipment \3 3,000 Less: Accumulated depreciation (6,000) 27,000 Internet domain 1,000 Total assets \3 1,300 Accounts payable \ 600 Salaries and wages payable 200 Note payable (due 2024) 22,100 Total liabilities 22,900 Common stock 7,000 Retained earnings 1,400 Total stockholders' equity Total liabilities and stockholders' equity \3 1,300

Use the following data to determine the total dollar amount of assets to be classified as current assets. Koonce Office Supplies Balance Sheet December 31,2022 Cash \ 195,000 Accounts receivable 150,000 Inventory 165,000 Prepaid insurance 90,000 Stock investments 255,000 Land 270,000 Buildings \3 15,000 Less: Accumulated depreciation (60,000) 255,000 Trademarks 210,000 Total assets \ 1590,000 Accounts payable \ 210,000 Salaries and wages payable 30,000 Mortgage payable 240,000 Total liabilities 480,000 Common stock 360,000 Retained earnings 750,000 Total stockholders' equity 1,110,000 Total liabilities and stockholders' equity \ 1590,000

Use the following data to determine the total amount of working capital. Koonce Office Supplies Balance Sheet December 31,2022 Cash \ 195,000 Accounts receivable 150,000 Inventory 165,000 Prepaid insurance 90,000 Stock investments 255,000 Land 270,000 Buildings \3 15,000 Less: Accumulated depreciation (60,000) 255,000 Trademarks 210,000 Total assets \ 1590,000 Accounts payable \ 210,000 Salaries and wages payable 30,000 Mortgage payable 240,000 Total liabilities 480,000 Common stock 360,000 Retained earnings 750,000 Total stockholders' equity 1,110,000 Total liabilities and stockholders' equity \ 1590,000

A short-term creditor is primarily interested in the __________ of the borrower.

It is possible for an asset to be a current asset even though the expected conversion of that asset into cash is to be longer than one year or the normal operating cycle.

Working capital is

The debt to assets ratio is a

The current ratio is a more dependable indicator of liquidity than working capital.

Using the following balance sheet and income statement data what is the debt to assets ratio? Current assets \ 32,000 Net income \ 42,000 Current liabilities 16,000 Stockholders' equity 78,000 Average assets 160,000 Total liabilities 42,000 Total assets 120,000

Which of the following is not considered an asset?

The main difference between intangible assets and property plant and equipment is the length of the asset's life.

The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is

Working capital is a measure of