# Ratio Analysis and Overhead Calculation in Accounting

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Accounting
FINANCE 1
Question 1:
A.
1. Profitability Ratio defines the earning power of the company.
2. Total Assets turnover and Debt to Assets ratios are used to evaluate the financial acquisition of
assets.
3. Account receivable ratio defines the ability to collect the debtor’s amount of the company.
4. Interest coverage ratio refers the ability of the company to cover its interest.
5. Inventory Turnover Ratio are used to define the length of time taken by the firm to sell its
inventory to consumers.
B.
Ratio's 2018
Profitability Ratio
Gross Margin Gross Profit 157500
Net Sales 850500 18.52%
Net Profit Net Profit 94500
Net Sales 850500 11.11%
Return on Equity Net Income 94,500
Average Shareholders’ Equity 401310 0.24
FINANCE 2
Efficiency Ratio
Inventory Turnover
ratio Cost of goods sold 56700
Average inventory 236250 0.24
Total Assets Turnover Net sales 850500
Average Total Assets 782775 1.09
Account Receivables Sales 850500
Average Account Receivable 284500 2.99
Interest Coverage
Ratio EBIT 157500
Interest Expenses 6300 25
Liquidity Ratio
Current Ratio Current Assets 570150
Current Liabilities 312480 1.82
Quick Ratio
Current Assets (Account Receivables
+cash) 318150
Current Liabilities 312480 1.02

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