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(Solved) (Latest ver. Aug 2020) - Liquidity and Operating Income Return on Investment: Bill Arts Company

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Below are financial statements for Bills Art Company.
Question 1: How Liquid is the firm? Select one of two recongized approaches to answering this question.
Question 2: Calculate the operting income return on investment (OIROI). Explain your answer.
Question 3: Are the Owners (stockholders) receiving an adequate return on their investment?

Bill Arts Company
Income Statement
Sales $4,195,197
Cost of goods sold 2,673,129
Gross profit $1,522,068
Selling, G&A expenses $ 465,831
Depreciation 160,119
Total operating expenses 625,950
Operating profit $ 896,118
Interest expense 17,849
Earning before taxes $ 878,269
Income taxes 298,052
Net Income $ 580,217

Balance Sheet
Assets
Cash$795,728
Accounts receivable $964,465
Other current assets$306,394
Total current assets$2,066,586
Gross plant property$2,006,256
Depreciation $ 973,660
Net plant and property$1,032,596
Other assets$ 762,035
Total Assets$3,861,217
Liabilities
Liabilities
Account s payable$ 382,579
Accrued expenses$ 226,977
Income taxes payable $ 380,496
Total current liabilities$ 990,052
Long term debt$ 638,250
Total Liabilities$1,628,302
Common Equity
Common stock (par value)$ 3,254
Paid in capital$ 386,284
Retained earnings$2,325,737
Less treasury stock$ (482,360)
Total common equity$2,232,915
Total liability and equity$3,861,217

 







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