Financial ratios Essay Sample

Net income border on gross revenues for 2013. Net income/net gross revenues. receivables turnover ratio net sales/average A/R stock list turnover ratio for 2013. COGs/average inventory plus turnover ratio for 2013. Net sales/average entire gross revenues mean collection period for 2013. 365/receive turnover ratio. mean yearss in stock list for 2013. 365 / stock list turnover ratio denary topographic point. return on assets for 2013. Net income margin*assets turnover. return on stockholders’ equity for 2013. Net income/ norm stockholder’s On December 15. 2013. Rigsby Gross saless Co. sold a piece of land of land that cost $ 3. 600. 000 for $ 4. 500. 000. Rigsby suitably uses the installment sale method of accounting for this dealing. Footings called for a down payment of $ 500. 000 with the balance in two equal one-year installments collectible on December 15. 2014. and December 15. 2015. Ignore involvement charges. Rigsby has a December 31 year-end.

In 2013. Rigsby would acknowledge accomplished gross net income of entry at December 31. 2013? Gross net income % = ( $ 4. 500. 000-3. 600. 000 ) / $ 4. 500. 000=20 % 2013:20 % ten $ 500. 000= $ 100. 000 In its December 31. 2013. balance sheet. Rigsby would describe In 2013. Rigsby would acknowledge accomplished gross net income of: entry at December 31. 2013? Gross net income % = ( $ 4. 500. 000-3. 600. 000 ) / $ 4. 500. 000=20 % 2013:20 % ten $ 500. 000= $ 100. 000

At December 31. 2014. Rigsby would describe in its balance sheet: Balance sheet: Deferred gross net income: $ 800. 000 – 400. 000 = $ 400. 000Realized gross net income of $ 400. 000 would be reported in the income statement. Arizona Desert Homes ( ADH ) constructed a new subdivision during 2012 and 2013 under contract with Cactus Development Co. Relevant informations are summarized below:

ADH uses the percentage-of-completion method to acknowledge gross. What would be the journal entry made in 2012 to enter gross? Percentage complete = $ 1. 200. 000/ ( $ 1. 200. 000 + $ 600. 000 ) =2/3Revenuerecognized=2/3* $ 3. 000. 000= $ 2. 000. 000Costrecognized= $ 1. 200. 000Gross net income recognized= $ 2. 000. 000- $ 1. 200. 000= $ 800. 000 In its December 31. 2012. balance sheet. ADH would describe: For 2013. what is the journal entry to enter gross? Entire gross $ 3. 000. 000 – Revenue antecedently recognized $ 2. 000. 000 = Gross to acknowledge this twelvemonth $ 1. 000. 000. Cost recognized = $ 600. 000Gross net income recognized = $ 1. 000. 000 – $ 600. 000 = $ 400. 000 Quiz 2 The investing class for which the investor’s “positive purpose and ability to hold” is of import is: Securities classified as held to adulthood Which class wholly excludes equity securities? Held-to-maturity securities Beresford Inc. purchased several investing securities during 2012. its first twelvemonth of operations.

The undermentioned information pertains to these securities. The fluctuations in their just values are non considered permanent. What balance sheet sum would Beresford describe for its entire investing securities atThe held-to-maturity securities are reported at amortized cost. and the others are reported at just value. 367. 500 + 48. 000 + 47. 000 + 44. 000 + 130. 500 What would be the balance in Beresford’s accumulated other comprehensive income with regard to these investings in its 12/31/2013 balance sheet ( ignore revenue enhancements ) ? This is the cumulative addition in just value above cost for its available-for-sale securities. OCI is merely adjusted for Available for Sale Securities. 150. 400 – 140. 000. Changes in just value for Trading Securities are run through the income statement. What entire unfulfilled keeping addition would Beresford describe in its 2013 income statement relation to its investing securities? This is the difference between the just value of trading securities at 12/31/2013 and at 12/31/2012. ( 59. 500 – 48. 000 ) + ( 77. 000 – 47. 000 ) + ( 38. 500 – 44. 000 )

Accumulated Other Comprehensive Income in the shareholders’ equity subdivision of the balance sheet reflects alterations in the just value of securities for which type of securities Securities available for sale When an equity security is suitably carried and reported as securities available for sale. a addition should be reported in the income statement: Merely when the security is sold Zwick Company bought 28. 000 portions of the vote common stock of Handy Corporation in January 2013. In December. Handy announced $ 200. 000 net income for 2013 and declared and paid a hard currency dividend of $ 2 per portion on the 200. 000 portions of outstanding common stock. Zwick Company’s dividend gross from Handy Corporation in December 2013 would be Ownership portion = 28. 000/200. 000 = 14 % . so neither the equity method nor consolidation is appropriate. 28. 000 portions x $ 2. 00 per portion = $ 56. 000 When utilizing the equity method to account for an investing. hard currency dividends received by the investor from the investee should be recorded: As a decrease in the investing history When the investor’s degree of influence alterations. it may be necessary to alter from the equity method to another method.

When the degree of ownership falls from a scope of 20 % to 50 % to less than 20 % . the equity method typically would be discontinued and the investing history balance would be carried over at: The current balance. and this balance would function as the new “cost. ” Bloomfield Bakers histories for its investing in Clor Confectionary under the equity method. Bloomfield carried the Clor investing at $ 150. 000 and $ 165. 000 at December 31. 2012 and 2013. severally. During 2013 Clor recognized $ 80. 000 of net income and paid dividends of $ 30. 000. Assuming that Bloomfield owned the same per centum of Clor throughout 2013. their per centum ownership must hold been: $ 150. 000 + X % ( $ 80. 000 – $ 30. 000 ) = $ 165. 000. X = 30 %

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