Basic Financial Ratios

The accounting staff of CCB Enterprises has completed the financial statements for the 2017 calendar year. The statement of income for the current year and the comparative statements of financial position for 2017 and 2016 follow.

CCB Enterprises
Statement of Income
For the Year Ended December 31, 2017
(thousands omitted)
Revenue:
Net sales	$795,940
Other	60,400
Total revenue	$856,340
Expenses:
Cost of goods sold	$543,840
Research and development	24,740
Selling and administrative	153,720
Interest	20,240
Total expenses	$742,540
Income before income taxes	$113,800
Income taxes	45,520
Net income	$68,280

CCB Enterprises
Comparative Statements of Financial Position
December 31, 2017 and 2016
(thousands omitted)
	2017	2016
Assets
Current assets:
Cash and short-term investments	$26,250	$20,720
Receivables, less allowance for doubtful accounts
($1,120 in 2017 and $1,430 in 2016)	47,810	50,240
Inventories, at lower of FIFO cost or market	64,880	62,060
Prepaid items and other current assets	4,760	3,240
Total current assets	$143,700	$136,260
Other assets:
Investments, at cost	$105,790	$105,790
Deposits	10,100	7,710
Total other assets	$115,890	$113,500
Property, plant, and equipment:
Land	$12,020	$12,020
Buildings and equipment, less accumulated depreciation
($126,510 in 2017 and $121,820 in 2016)	267,720	247,980
Total property, plant, and equipment	$279,740	$260,000
Total assets	$539,330	$509,760
Liabilities and Owners Equity
Current liabilities:
Short-term loans	$22,260	$24,020
Accounts payable	71,790	70,990
Salaries, wages, and other	26,260	27,190
Total current liabilities	$120,310	$122,200
Long-term debt	$159,910	$170,330
Total liabilities	$280,220	$292,530
Owners equity:
Common stock, at par	$44,120	$41,910
Paid-in capital in excess of par	63,780	60,890
Total paid-in capital	$107,900	$102,800
Retained earnings	151,210	114,430
Total owners equity	$259,110	$217,230
Total liabilities and owners equity	$539,330	$509,760

Required:

1. Calculate the following financial ratios for 2017 for CCB Enterprises:

Round items h, j, and k to the nearest whole number. Round all other answers to two decimal places. Assume a 360-day year.

a. Times interest earned	1 to 1
b. Return on total assets	2 %
c. Return on common stockholders' equity	3 %
d. Debt-to-equity ratio (at December 31, 2017)	4 to 1
e. Current ratio (at December 31, 2017)	5 to 1
f. Quick (acid-test) ratio (at December 31, 2017)	6 to 1
g. Accounts receivable turnover ratio (Assume that all sales are on credit.)	fill in the blank 7 times
h. Number of days' sales in receivables	fill in the blank 8 days
i. Inventory turnover ratio (Assume that all purchases are on credit.)	fill in the blank 9 times
j. Number of days' sales in inventory	fill in the blank 10 days
k. Number of days in cash operating cycle	fill in the blank 11 days

2. Which of the following statements pertaining to ratio analysis of CCB Enterprises is true?