Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 9, Problem 8EA
Using the following select financial statement information from Black Water Industries, compute the accounts receivable turnover ratios for 2018 and 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Black Water Industries?
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2. Using the following select financial statement information from Black Water Industries, compute the accounts
receivable turnover ratios for 2018 and 2019 (round answers to two decimal places). What do the outcomes tell a
potential investor about Black Water Industries?
Year
2017
2018
2019
BLACK WATER INDUSTRIES
Net Credit Sales
$685,430
700,290
768,500
Ending Accounts Receivable
$330,250
360,450
401,650
Review the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following.
Compute the accounts receivable turnover ratios for each company for 2018 and 2019.
Compute the number of days’ sales in receivables ratios for each company for 2018 and 2019.
Determine which company is the better investment and why. Round answers to two decimal places.
As part of your analysis, you are required to investigate Micron Industries’ cash flows and selected ratios.Required: Using the financial statement provided on page 1:
(a) Compute the following ratios for Micron Industries for 2018 and 2019:i. Return on Equity using Du Pont Identity ii. Earnings Per Share (EPS) iii. Price/Earning (P/E) Ratio iv. Book Value Per Share v. Market-to-Book Ratio
(b) Calculate the following for 2019:i. Operating Cash Flowii. Net Capital Spending iii. Change in Net Working Capital iv. Cash Flow from Assets v. Cash Flow to Creditors vi. Cash Flow to Stockholders
Chapter 9 Solutions
Principles of Accounting Volume 1
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