Financial statements for AAR Company appear below:

AAR Company paid dividends of $3.15 per share during the year.The market price of the company's common shares at December 31 was $63 per share.Total assets at the beginning of the year were $1,100,000,and total shareholders' equity was $725,000.The balance of accounts receivable at the beginning of the year was $150,000.The balance in inventory at the beginning of the year was $250,000.
Required:
Calculate the following:
a)Current ratio.
b)Acid-test (quick)ratio.
c)Average collection period (age of receivables).
d)Inventory turnover.
e)Times interest earned.
f)Debt-to-equity ratio.
g)Dividend payout ratio.
h)Price-earnings ratio.
i)Return on total assets.
j)Return on common shareholders' equity.
k)Was financial leverage positive or negative for the year? Explain.

Question

Financial statements for AAR Company appear below:

AAR Company paid dividends of $3.15 per share during the year.The market price of the company's common shares at December 31 was $63 per share.Total assets at the beginning of the year were $1,100,000,and total shareholders' equity was $725,000.The balance of accounts receivable at the beginning of the year was $150,000.The balance in inventory at the beginning of the year was $250,000.
Required:
Calculate the following:
a)Current ratio.
b)Acid-test (quick)ratio.
c)Average collection period (age of receivables).
d)Inventory turnover.
e)Times interest earned.
f)Debt-to-equity ratio.
g)Dividend payout ratio.
h)Price-earnings ratio.
i)Return on total assets.
j)Return on common shareholders' equity.
k)Was financial leverage positive or negative for the year? Explain.

Quizplus · Accepted Answer

The Answer of Financial statements for AAR Company appear below:

AAR Company paid dividends of $3.15 per share during the year.The market price of the company's common shares at December 31 was $63 per share.Total assets at the beginning of the year were $1,100,000,and total shareholders' equity was $725,000.The balance of accounts receivable at the beginning of the year was $150,000.The balance in inventory at the beginning of the year was $250,000.
Required:
Calculate the following:
a)Current ratio.
b)Acid-test (quick)ratio.
c)Average collection period (age of receivables).
d)Inventory turnover.
e)Times interest earned.
f)Debt-to-equity ratio.
g)Dividend payout ratio.
h)Price-earnings ratio.
i)Return on total assets.
j)Return on common shareholders' equity.
k)Was financial leverage positive or negative for the year? Explain.

Financial Statements for AAR Company Appear Below