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03 Elms Activity 1

ABC Company has current assets of $60 million including $15 million in cash and $20 million in marketable securities against current liabilities of $30 million, giving it a healthy current ratio of 2. Its debt to assets ratio is 0.57, meaning debt accounts for 57% of its total assets of $90 million. The company's return on assets is 16%, calculated as its $12 million net income divided by the average of its total assets.

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Sol Luna
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259 views1 page

03 Elms Activity 1

ABC Company has current assets of $60 million including $15 million in cash and $20 million in marketable securities against current liabilities of $30 million, giving it a healthy current ratio of 2. Its debt to assets ratio is 0.57, meaning debt accounts for 57% of its total assets of $90 million. The company's return on assets is 16%, calculated as its $12 million net income divided by the average of its total assets.

Uploaded by

Sol Luna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

ABC COMPANY

1. CURRENT ASSETS
Cash P15,000,000
Marketable Service 20,000,000
Inventory 25,000,000
P60,000,00
Total Current Assets 0

2.CURRENT LIABILITIES
Accounts Payable P15,000,000
Short Term Debt 15,000,000
Total Current Liabilities 30,000,000

3.CURRENT RATIO

Current Ratio = 60,000,000


30,000,000
Current Ratio = 2

4.DEBT TO ASSET RATIO


Debt to Asset ratio = 51,000,000
90,000,000
Debt to Assets Ratio = 0.57

5.Return on Assets

Return on Assets = 12,000,000    


(60,000,000 + 90,000,000/2)

Return on Assets = 12,000,000


75,000,000
Return on Assets 0.16 or 16%

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