Calculate profitability and liquidity measures [LO 3, 4, 6]
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Presented here are the comparative balance sheets of Hames, Inc., at December 31, 2011 and 2010. Sales for the year ended December 31, 2011, totaled $590,000. |
| Hames, Inc., Balance Sheets December 31, 2011 and 2010 |
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| 2011 | 2010 | |||||||
| Assets | ||||||||
| Cash | $ 21,000 | $ 19,000 | ||||||
| Accounts receivable | 78,000 | 72,000 | ||||||
| Merchandise inventory | 103,000 | 99,000 | ||||||
| Total current assets |
$202,000 |
$190,000 |
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| Land | 50,000 | 40,000 | ||||||
| Plant and equipment | 125,000 | 110,000 | ||||||
| Less: Accumulated depreciation | (65,000 | ) | (60,000 | ) | ||||
| Total assets |
$312,000 |
$280,000 |
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| Liabilities | ||||||||
| Short term debt | $18,000 | $17,000 | ||||||
| Accounts payable | 64,800 | 75,000 | ||||||
| Other accrued liabilities |
20,000 |
18,000 |
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| Total current liabilities | $102,800 | $110,000 | ||||||
| Long term debt | 22,000 | 30,000 | ||||||
| Total liabilities |
$124,800 |
$140,000 |
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| Owners%u2019 Equity | ||||||||
| Common stock, no par, 100,000 shares authorized 40,000 and 25,000 shares issued, respectively |
$ 74,000 |
$ 59,000 |
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| Retained earnings: | ||||||||
| Beginning balance | $108,000 | $85,000 | ||||||
| Net income for the year | 25,200 | 1,000 | ||||||
| Dividends for the year | (20,000 | ) | (5,000 | ) | ||||
| Ending balance |
$113,200 |
$81,000 |
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| Total owners%u2019 equity |
$187,200 |
$140,000 |
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| Total liabilities and owners%u2019 equity |
$312,000 |
$280,000 |
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| Requirement 1: |
| Calculate ROI for 2011. (Round your percentage answer to two decimal places. Omit the “%” sign in your response.) |
| ROI | % |
| Requirement 2: |
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Calculate ROE for 2011. (Round your percentage answer to one decimal place. Omit the “%” sign in your response.) |
| ROE | % |
| Requirement 3: |
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Calculate working capital at December 31, 2011. (Round your answer to the nearest whole number. Omit the “$” sign in your response.) |
| Working capital | $ |
| Requirement 4: |
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Calculate the current ratio at December 31, 2011. (Round your answer to two decimal places.) |
| Current ratio |
| Requirement 5: |
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Calculate the acid test ratio at December 31, 2011. (Round your answer to two decimal places.) |
| Acid test ratio |