Compute the specified ratios using the following December 31, 2018, statement of financial position for Palmer Company.
Assets
Cash……………………………………………………………….. $110,000
Marketable securities…………………………………………………. 10,000
Accounts receivable………………………………………………… 120,000
Inventory…………………………………………………………… 160,000
Property and equipment……………………………………………. 250,000
Accumulated depreciation…………………………………………. (50,000)
Total assets………………………………………………………… $600,000
Liabilities and Stockholders’ Equity
Accounts payable………………………………………………….. $ 86,000
Current notes payable………………………………………………… 4,000
Mortgage payable………………………………………………….. 130,000
Bonds payable………………………………………………………. 82,000
Common stock…………………………………………………….. 200,000
Retained earnings…………………………………………………… 98,000
Total liabilities and stockholders’ equity………………………… $600,000
The average number of common shares outstanding during 2018 was 1,500. Net income for the year was $60,000.
Required
Compute each of the following and round computations to two decimal points.
a. Current ratio
b. Earnings per share
c. Acid-test ratio
d. Return on investment
e. Return on equity
f. Debt to equity ratio
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