Financial information for Messersmith Company is presented below
Additional Information
- Inventory at the beginning of 2019 was $118,000
- Total Assets at the beginning of 2019 were $630,000.
- No common stock transactions occurred during 2019 or 2020
- All sales wer on account. Accounts receivable, net at the beginning of 2019, were $88,000.
- Notes payable are classified as current liabilities.
Instructions
- Indicate, by using ratios, the change in liquidity and profitability of Meassersmith Company from 2019 to 2020.
- Given below are theree independent situation and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2020, and (2) as of December 31, 2021, after giving effect to the situation. Net income for 2021 was $50,000. Total assets on December 31, 2021, were $700,000
Solution
a.
b.
