12.As a security analyst for Market Masters, Inc., you have chosen to invest in one high-tech firm. You have narrowed your choice between RamTech Company or Accutrex Industries, firms of similar size and direct competitors in the industry. The following information was taken from their 2009 annual reports:
RamTech
Accutrex
2010
2009
Deferred income tax liability
$ 19,400
$15,600
$ 19,800
$21,800
Income before taxes
163,000
158,500
Income tax expense
(50,000)
(52,500)
Net income
113,000
106,000
Effective income tax rate
35%
13.PorterProductsrecognizes expenses for wages, interest and rent when cash payments are made. The following related cash payments were made during December 2009:
December 5 & 20
Wages in the amount of $15,000 are paid on the 5thand the 20thof each month for the fifteen days just ended. The next payment will be on January 5, 2010.
December 15
Paid a semi-annual $300 interest payment on an outstanding note payable with a face value of $10,000 and a 6 percent annual interest rate.
As of December 31, the current assets and current liabilities reported on Porter’s balance sheet were $36,000 and $22,500, respectively. Porter’s income statement reported net income of $11,250.
Required: Compute Porter’s current ratio and net income if the company were to account for wages, interest, and rent on an accrual basis.
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