# Accounting: Generally Accepted Accounting Principles and Average Total Assets Essay

Submitted By aburgart
Words: 614
Pages: 3

Amanda Burgart
Chapters 3 & 4 Homework
2/20/12
E3.6. | | a. | ROI = (\$83,700 Net income / \$2,790,000 Sales) x (2,790,000 Sales / 1,395,000 Average total assests) = 6.0% Turnover = (2,790,000 Sales / \$1,395,000 Average total assets) Turnover = 2 Margin = (\$83,700 Net income / \$2,790,000 Sales) = 3.0% ROI = (3.0% Margin * 2 Turnover) = 6.0% | b. | 15% ROI = (\$150,000 Net Income/ \$2,500,000 Sales) x (\$2,500,000 Sales / Average total assets) Average total assets = \$1,000,000 Turnover = (2,500,000 Sales / \$1,000,000 Average total assets) Turnover = 2.5 | | | | | | | c. | 12.6% ROI = (Margin * 1.4 Turnover) Margin = 9% 1.4 Turnover = (Sales / \$1,730,159 Average total assets) Sales = \$2,422,223 12.6% ROI = (Net Income / \$1,730,159 Average total assets) Net Income = \$13,731,421 |

P3.12. | | a. | ROI = (Net income / Average total assets) = (\$34,000 / \$312,000) = 10.90% | b. | ROE = (Net income / Average stockholders' equity) = (\$34,000 / \$196,000) = 17.4% | c. | Working capital = Current assets - Current liabilities 12/31/11 12/31/10 Current assets \$202,000 \$190,000 - Current liabilities 94,000 83,000 = Working capital \$108,000 \$107,000 | P3.12. | (continued) | d. | Current ratio = Current assets / Current liabilities 12/31/11 12/31/10 Current assets ……… \$202,000 \$190,00 / Current liabilities ……… 94,000 83,000 = Current ratio ……… 2.15 2.29 | e. | Acidtest ratio = (Cash + Shortterm securities + Accounts and Notes receivable) Current liabilities 12/31/11 12/31/10 Cash and cash equivalents ……… \$21,000 \$19,000 Short-term investments 18,000 17,000 Trading assets ………65,000 60,000 Accounts receivable, net 78,000 72,000 Total (quick assets) ……… \$182,000 \$168,000 Total (quick assets) ………\$182,000 \$168,000 / Current liabilities 94,000 83,000 = Acidtest ratio 1.94 2.02 f. If Hames Inc. decided to pay \$15,000 of account payable, then the calculations above would decrease the values. |

E4.2. | | | ASSETS = LIABILITIES…