# ACC 205 Week Five Exercise Assignment - 68623

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1.      Liquidity ratiosEdison, Stagg, and Thornton have the following financial information at the close of business on July 10:

 Edison Stagg Thornton Cash \$6,000 \$5,000 \$4,000 Short-term investments 3,000 2,500 2,000 Accounts receivable 2,000 2,500 3,000 Inventory 1,000 2,500 4,000 Prepaid expenses 800 800 800 Accounts payable 200 200 200 Notes payable: short-term 3,100 3,100 3,100 Accrued payables 300 300 300 Long-term liabilities 3,800 3,800 3,800

1. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
2.      Computation and evaluation of activity ratiosThe following data relate to Alaska Products, Inc:

Instructions

a.       Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.

3. Profitability ratios, trading on the equityDigital Relay has both preferred and common stock outstanding. The com­pany reported the following information for 20X7:

1. Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
2. Does the firm have positive or negative financial leverage? Briefly ex­plain.

4.      Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

 a.       Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.

5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

a.       Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.

 6. Ratio computation. The financial statements of the Lone Pine Company follow. Instructions Compute the following items for Lone Pine Company for 20X2, rounding all calcu­lations to two decimal places when necessary: a. Quick ratio b. Current ratio c. Inventory-turnover ratio d. Accounts-receivable-turnover ratio e. Return-on-assets ratio f. Net-profit-margin ratio g. Return-on-common-stockholders’ equity h. Debt-to-total assets   i. Number of times that interest is earned
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