6.
Ratio computation
. The financial statements of the Lone Pine Company follow.
 
 
 
 
 
 
LONE PINE COMPANY
 
Comparative Balance Sheets
 
December 31, 20X2 and 20X1 ($000 Omitted)
 
20X2
20X1
 
Assets
 
Current Assets
 
Cash and Short-Term Investments
$400
 
$600
 
Accounts Receivable (net)
3,000
 
2,400
 
Inventories
3,000
 
2,300
 
Total Current Assets
$6,400
 
$5,300
 
Property, Plant, and Equipment
 
Land
$1,700
 
$500
 
Buildings and Equipment (net)
1,500
 
1,000
 
Total Property, Plant, and Equipment
$3,200
 
$1,500
 
Total Assets
$9,600
 
$6,800
 
Liabilities and Stockholders’ Equity
 
Current Liabilities
 
Accounts Payable
$2,800
 
$1,700
 
Notes Payable
1,100
 
1,900
 
Total Current Liabilities
$3,900
 
$3,600
 
Long-Term Liabilities
 
Bonds Payable
4,100
 
2,100
 
Total Liabilities
$8,000
 
$5,700
 
Stockholders’ Equity
 
Common Stock
$200
 
$200
 
Retained Earnings
1,400
 
900
 
Total Stockholders’ Equity
$1,600
 
$1,100
  
Total Liabilities and Stockholders’ Equity
$9,600
 
$6,800
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LONE PINE COMPANY
Statement of Income and Retained Earnings
For the Year Ending December 31,20X2 ($000 Omitted)
Net Sales*
 
$36,000
 
Less
: Cost of Goods Sold
$20,000
 
 
Selling Expense
6,000
 
 
Administrative Expense
4,000
 
 
Interest Expense
400
 
 
Income Tax Expense
2,000
32,400
 
Net Income
 
$3,600
 
Retained Earnings, Jan. 1
 
    
900
 
Ending Retained Earnings
 
$4,500
 
Cash Dividends Declared and Paid
 
 
3,100
 
Retained Earnings, Dec. 31
 
$1,400
 
*All sales are on account.
 
 
 
 
 
 
 
 
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