Accounting for Managers

Running head: ACCOUNTING FOR MANAGERS
Accounting for Managers
Name of the Student:
Name of the University:
Author’s Note:

ACCOUNTING FOR MANAGERS1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................4
Question 3........................................................................................................................................5
References........................................................................................................................................7

ACCOUNTING FOR MANAGERS2
Question 1
a) Financial Ratio
 Earning Power of Company: Return on Equity.
 Usage of Internal Resource for Finance of Asset: Equity Multiplier (Total Assets/Total
Equity Ratio).
 Rapidity of Receivables: Accounts Receivable Turnover Ratio
 Entity Earnings in Response to Interest Payments: Interest Coverage Ratio
 Time Taken for selling Inventory Days Sales of Inventory (365/Inventory Turnover
Ratio)
b) Suitability of Ratio
Financial Ratios
Particulars
Amount
($)
Net Income 94500
Beginning Shareholder's Equity 434070
Return on Equity 21.77%
Total Assets 809550
Total Equity 315000
Equity Multiplier (Total Assets/Total Equity
Ratio). 2.57
Sales 850500
Returns 26350
Accounts Receivable at Beginning of Year 315000
Accounts Receivable at End of Year 280350
Accounts Receivable Turnover Ratio 2.769
Accounts Receivable Turnover Ratio in Days 132
Earnings before Interest and Taxes 163800
Interest Charges 6300
Interest Coverage Ratio 26
Cost of Goods Sold 567000
Average Inventory (Beginning + Ending Inventory-) 236250
Inventory Turnover Ratio 2.4
Days Sales in Inventory 152