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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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123 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
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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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