- Showing your work requires you to show numbers used in calculating the ratios
- Showing your formulas requires you to show what the formulas entail. For example the formula for Current Ratio is Current Assets divided by Current Liabilities or Currents / Current Liabilities.
- Some formulas require you to first calculate the average between two years. Make sure you calculate the average before you use the average in the ratio computation. To calculate the average, you add the value for 2011 and 2012 and divide it by 2. In Problem Set P2-6A, the Average number of shares outstanding is given, so you do not need to calculate the average again.
- In Problem Set P2-6A, be careful of not switching the answers for 2011 and 2012. Check the column on the answer sheet before entering your answers
- In Problem Set P2-6A, Debt to Total Assets ratio is only the total of liabilities (Current Liabilities and Long-term debt) divided by total assets. Do not include the amount for Stockholder’s Equity (Common Stock and Retained Earnings).
- To calculate the Earnings per Share on Problem Set P13-2A, you will first need to calculate the number of common shares by taking the total common stock for each year and divide it by $5 par. Once you have the number of common shares for each year, you can get the average common shares outstanding by adding both years and divide it by 2. After you have the average common shares outstanding, you take the Net income and divide it by that number.
- There were no Preferred Stock Dividends in both problem sets
- See Tools for Analysis on Page 888 for Ratio Formulas
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