Statement of Cash Flows- Assignment Example | Topics and Well Written Essays - 2000 words

Statement of Cash Flows- - Assignment ExampleThe formula for the paying back on assets is winnings income shared by total assets (BPP 2009). Market get by _(c) A fraternitys percentage share of total dollar barters within its industry. Working capital _ (d) Current assets less on-going liabilities. Price- pay symmetry _ (e) A measure reflecting investors expectations of future profitability. The formula for the price-earnings ratio is price per share divided by earnings per share (EPS) (BPP 2009). Quick ratio _ (f) A measure of inadequate-term solvency often used when a company has large inventories that cannot be quickly converted into cash. The formula for the quick ratio finds the total of all authorized assets with the exception of inventories and divides the result by the total of all current liabilities. This ratio is the acid test for short term solvency. It takes into consideration the cash cycle of turning inventory into cash, the fact that it may take a while befo re the inventory and the cash s received by way of cash sale or credit sale. Additionally, inventory can become obsolete. Earnings per share _ (g) A ratio that helps separate stockholders relate the net income of a large corporation to their equity investment. The formula for earnings per share EPS is fire income divided by number of issued shares. ... $163,000 + $96,000 = $259,000 (3) The current ratio 1.5 to 1 i.e. the ratio of current assets to current liabilities - $388,000/259,000 = 1.5 (4) Net Working capital $129,000 i.e. $388,000 - $259,000 (b) Assume that Red Missile Company pays the note payable of $163,000, thus trim back cash to $17,000. Compute the adjacent after the completion of this transaction (1) The current ratio 2.34 to 1 i.e. 225,000 ($388,000 163,000) divided by 96,000 ($259,000 163,000) Calculation of current assets Cash ($180,000 - $163,000) $17,000 Accounts Receivable $84,000 Inventory $124,000 Current assets $225,000 Calculation of current liabilitie s Accounts collectable $96,000 Current liabilities $96,000 (2) Net Working capital $129,000- i.e. current assets minus current liabilities $225,000 - $96,000 3- Shown below are selected items coming into court in a recent balance sheet of Grant Products. (Dollar amounts are in thousands.) (a) Compute the following (1) Total quick assets $2,770 and is calculated as follows Calculations of Total quick assets Cash and cash equivalents $620 Investments in sellable securities $300 Receivables $1,400 Prepaid expense and another(prenominal) current assets $450 Quick assets $2,770 (2) Total current assets $3,870 and is calculated as follows Calculation of total current assets Cash and cash equivalents $620 Investments in marketable securities $300 Receivables $1,400 Inventories $1,100 Prepaid expenses and other current assets $450 Current assets $3,870 (3) Total current liabilities $2200 i.e. $1,600 + $300 + $300 Calculation of current liabilities Accounts payable $1,600 confide loans payable within a year $300 Income tax payable $300 Total current liabilities