BUSI 320 Comprehensive Problem 1 Use the following information to answer the questions below: note: all sales are credit sales Income Stmt info: 2013 2014 Sales $ 1,050,000 $ 1,128,750 less Cost of Goods Sold: 325,000 346,125 Gross Profit 725,000 782,625 Operating Expenses 575,000 609,500 Earnings before Interest & Taxes 150,000 173,125 Interest exp 25,000 29,000 earnings before Taxes 125,000 144,125 Taxes 50,000 57,650 Net Income $ 75,000 $ 86,475 Balance Sheet info: 12/31/2013 12/31/2014 Cash 60,000 $ 66,000 Accounts Receivable 80,000 $ 83,200 Inventory 110,000 $ 119,900 Total Current Assets $ 250,000 $ 269,100 Fixed Assets (Net) $ 300,000 $ 318,000 Total Assets $ 550,000 $ 587,100 Current Liabilities $ 130,000 $ 136,500 Long Term Liabilities $ 150,000 $ 170,000 Total Liabilities $ 280,000 $ 306,500 Stockholder's Equity $ 270,000 $ 280,600 Total Liab & Equity: $ 550,000 $ 587,100 Compute each of the following ratios for 2013 and 2014 and indicate whether each ratio was getting "better" or "worse" from 2013 to 2014 and whether the 2014 ratio was "good" or "bad" compared to the Industry Avg. (round all numbers to 2 digits past the decimal place) 2013 2014 Getting Better or Getting Worse? 2014 Industry Avg "Good" or "Bad" compared to Industry Avg Profit Margin 0.11 Current Ratio 1.90 Quick Ratio 1.12 Return on Assets .26 Debt to Assets .55 Receivables turnover 18.00 Avg. collection period* 21.20 Inventory Turnover** 8.25 Return on Equity 0.25 Times Interest Earned 8.15 *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)