Test Yourself—Problems and Solutions

Q 1. Following are the financial statements of AB Ltd. for 2010.

From the aforementioned table, calculate the following:

  1. Current ratio
  2. Liquid ratio
  3. Receivables turnover ratio and collection period
  4. Inventory turnover and holding period
  5. Fixed assets turnover
  6. Total assets turnover
  7. Debt ratio
  8. D/E ratio
  9. Interest coverage ratio
  10. PAT margin
  11. ROA
  12. ROE
  13. EPS
  14. D/P ratio
  15. P/E ratio
  16. Book value per share

Solution:

1. Current Ratio

The current ratio is 2.2.

where:

Total current assets = $1,100

Total current liabilities = $500 ...

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