Q1) Reflect the relationships sustained by convington pike in recent years:
Profit margin on sales =5%
return on assets =7.5%
Gross profit margin =40%
inventory turnover ratio = 6times
receivables turnover ratio = 25
acid- test ratio = .9
current ratio = 2 to 1
return on shareholders' equity = 10%
debt to equity ratio = 1/3
times interest earned ratio = 12 times
jotted in the margins are the following notes:
net income $15,000
Only one short-term not (5,000); all other current Liabilities are trade accounts
property, plant, and equipment are the only noncurrent assets
bond payable are the only noncurrent liabilities
the effective interest rate on short - term notes and bonds is 8%
no investment securities
Cash balance totals $15,000
problems:
You are requested to approximate current year's balances in form of a balance sheet and income statement, to extent information permits. Accompany those financial statement with computations you used to evaluate each amount reported.