Ratio Exercise

Topics: Balance sheet, Liability, Asset Pages: 4 (678 words) Published: October 25, 2014
BUSI
 610
 
SUPPLEMENTAL
 EXERCISE
 1:
 
 RATIO
 ANALYSIS
 

 
The
 balance
 sheet
 of
 Blugreens,
 a
 leading
 drugstore
 chain,
 as
 of
 August
 31,
 2009,
 appears
 as
 follows
 
(dollars
 in
 millions):
 

 
ASSETS
 

  LIABILITIES
 and
 STOCHOLDERS’
 EQUITY
 
Cash
 
$
 
 
 
 450
 

 
Accounts
 payable
 
$
 1,836
 
Accounts
 Receivable
 

 
 
 
 
 
 955
 

 
Other
 short-­‐term
 payables
 

 
 
 
 1,119
 
Inventory
 

 
 
 3,645
 

 
Long-­‐term
 payable
 

 
 
 
 
 
 
 693
 
Other
 noncurrent
 assets
 

 
 
 4,829
 

 
Contributed
 capital
 

 
 
 
 
 
 
 829
 

 

 

 
Retained
 earnings
 

 
 
 
 5,402
 

 

 

 
Total
 liabilities
 and
 

 
Total
 assets
 

 
 $9,879
 

 

 
 
 
 
 Stockholders’
 equity
 

 
 
 $9,879
 

 
Required:
 
Assume
 the
 following
 eight
 transactions
 occurred
 during
 the
 next
 year
 (dollars
 in
 millions).
 
 Indicate
 the
 
effect
 of
 each
 transaction
 on
 net
 income
 (revenues
 minus
 expenses);
 the
 current
 ratio
 (current
 assets
 
divided
 by
 current
 liabilities);
 working
 capital
 (current
 assets
 minus
 current
 liabilities);
 and
 the
 debt
 to
 
equity
 ratio
 (total
 liabilities
 divided
 by
 total
 stockholders’
 equity)
 of
 Blugreens.
 
 Use
 the
 following
 
notation:
 increase
 (
 ↑
 ),
 decrease
 (
 ↓
 ),
 or
 no
 effect
 (
 ⎯
 )....
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