Question
BUSI 320 Comprehensive Problem 1 NAME : _________________ Compute each of the following ratios for 2015 and 2016 and indicate whether each ratio was getting
BUSI 320 Comprehensive Problem 1
NAME: _________________
Compute each of the following ratios for 2015 and 2016 and indicate whether each ratio was getting "better" or "worse" from 2015 to 2016 and was "good" or "bad" compared to the Industry Avg for 2016. (round all numbers to 2 digits past the decimal place)
Type your answers in the table and submit this document.
| Ratios | 2015 | 2016 | Enter Better or Worse | Industry Avg | Enter "Good" or "Bad" compared to Industry Avg | ||||
| Profit Margin | 1 |
| 11 |
| 21 |
| 0.11 | 31 |
|
| Current Ratio | 2 |
| 12 |
| 22 |
| 1.90 | 32 |
|
| Quick Ratio | 3 |
| 13 |
| 23 |
| 1.12 | 33 |
|
| Return on Assets | 4 |
| 14 |
| 24 |
| .26 | 34 |
|
| Debt to Assets | 5 |
| 15 |
| 25 |
| .55 | 35 |
|
| Receivables turnover | 6 |
| 16 |
| 26 |
| 18.00 | 36 |
|
| Avg. collection period* | 7 |
| 17 |
| 27 |
| 21.20 | 37 |
|
| Inventory Turnover** | 8 |
| 18 |
| 28 |
| 8.25 | 38 |
|
| Return on Equity | 9 |
| 19 |
| 29 |
| 0.25 | 39 |
|
| Times Interest Earned | 10 |
| 20 |
| 30 |
| 8.15 | 40 |
|
| *Assume a 360 day year | |||||
| **Inventory Turnover can be computed 2 different ways. Use the formula listed in the text | |||||
| (the one the text indicates many credit reporting agencies generally use) | |||||
| Use the following information to answer the questions above: |
| ||||||
|
| note: all sales are credit sales |
| |||||
|
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| Income Stmt info: | 2015 | 2016 | ||||
|
| Sales | $ 1,000,000 | $ 1,050,000 | ||||
|
| less Cost of Goods Sold: | 400,000 | 424,000 | ||||
|
| Gross Profit | 600,000 | 626,000 | ||||
|
| Operating Expenses | 350,000 | 365,750 | ||||
|
| Earnings before Interest & Taxes | 250,000 | 260,250 | ||||
|
| Interest exp | 25,000 | 25,500 | ||||
|
| Earnings before Taxes | 225,000 | 234,750 | ||||
|
| Taxes | 90,000 | 93,900 | ||||
|
| Net Income | $ 135,000 | $ 140,850 | ||||
|
| |||||||
|
| Balance Sheet info: | 12/31/2015 | 12/31/2016 | ||||
|
| Cash | 25,000 | $ 30,000 | ||||
|
| Accounts Receivable | 50,000 | $ 51,000 | ||||
|
| Inventory | 125,000 | $ 137,500 | ||||
|
| Total Current Assets | $ 200,000 | $ 218,500 | ||||
|
| Fixed Assets (Net) | $ 300,000 | $ 315,000 | ||||
|
| Total Assets | $ 500,000 | $ 533,500 | ||||
|
| |||||||
|
| Current Liabilities | $ 110,000 | $ 117,700 | ||||
|
| Long Term Liabilities | $ 180,000 | $ 183,000 | ||||
|
| Total Liabilities | $ 290,000 | $ 300,700 | ||||
|
| Stockholder's Equity | $ 210,000 | $ 232,800 | ||||
|
| Total Liab & Equity: | $ 500,000 | $ 533,500 | ||||
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