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Q1) The information given below has been taken from financial statements of Gaines Company. Gaines Company has only issued common stock.

Net income $ 70,000
Total assets, January 1, 20X9 500,000
Total liabilities, December 31, 20X9 175,000
Net sales 900,000
Interest expense 20,000
Current assets, December 31, 20X9 150,000
Current liabilities, December 31, 20X9 75,000
Income tax expense 25,000
Total assets, December 31, 20X9 575,000
Stockholders' equity, January 1, 20X9 300,000
Stockholders' equity, December 31, 20X9 400,000
Common shares outstanding for 20X9 100,000

Use given data for Gaines Company to compute following ratios for 20X9:

a) Rate of return on total assets
b) Rate of return on common stockholders' equity
c) Rate of return on net sales
d) Times-interest-earned ratio
e) Debt ratio, December 31, 20X9
f) Current ratio, December 31, 20X9
g) Earnings per share of common stock

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  • Category:- Accounting Basics
  • Reference No.:- M919934

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