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Computation of various ratios from the given financial statements.

The condensed financial statements of Westward Corporation for 2006 are presented below.

Westward Corporation	Westward Corporation
Balance Sheet	Income Statement
31-Dec-06	For the Year Ended December 31, 2006

 

Assets		Revenues	2,000,000
Current assets		Expenses
Cash and temporary		Cost of goods sold	1,080,000
investments	30,000	Selling and administrative
Accounts receivable	70,000	expenses	495,000
Inventories	120,000	Interest expense	30,000
Total current assets	220,000	Total expenses	1,605,000
		Income before income taxes	395,000
equipment (net)	780,000	Income tax expense	140,000
Total assets	1,000,000	Net income	255,000

 

Liabilities and Stockholders’ Equity
Current liabilities	80000
Long-term liabilities	300000
Common stockholders’ equity	620000
	Total liabilities and
	stockholders’ equity	1000000

Additional data as of December 31, 2005: Inventory = $100,000; Total assets = $900,000; Common stockholders’ equity = $540,000.

Instructions

Compute the following listed ratios for 2006 showing supporting calculations.
(a) Current ratio = __________________________________________________________.
(b) Debt to total assets = _____________________________________________________.
(c) Times interest earned = ___________________________________________________.
(d) Inventory turnover = _____________________________________________________.
(e) Profit margin ratio = ______________________________________________________.
(f) Return on common stockholders’ equity = ____________________________________.
(g) Return on assets = _______________________________________________________.

Attached file(s)

Solution Attachment

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