Current position analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. b. The liquidity of Nilo has from the preceding year to the current year. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of an in current assets relative to current liabilities. Current position analysis The bond indenture for the 10-year, 9% debenture bonds issued January 2, 20Y5, required working capital of $100,000, a current ratio of 1.5 , and a quick ratio of 1.0 at the end of each calendar year until the bonds mature. At December 31, 20Y6, the three measures were computed as follows: a. Find the errors in the determination of the three measures of current position analysis. Then provide the correct amounts below. If required, round the ratios to one decimal place. b. Is the company satisfying the terms of the bond indenture? Profitability ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 20Y7, 20Y6, and 20 Y5: The 20Y7 net income was $17,800, and the 20Y6 net income was $13,230. No dividends on common stock were declared between 20Y5 and 20Y7. Preferred dividends were declared and paid in full in 20Y6 and 20Y7. a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 20Y6 and 20Y7. When required, round your answers to one decimal place. b. The profitability ratios indicate that the company's profitability has . Since the return on assets is the return on stockholders' equity in both years, there must be leverage from the use of debt. Asset turnover Three major segments of the transportation industry are motor carriers, such as Atlantic; railroads, such as Pacific; and transportation arrangement services, such as Mediterranean. Recent financial statement information for these three companies is shown as follows (in thousands of dollars): a. Determine the asset turnover for all three companies. Round your answers to one decimal place. b. The ratio of sales to assets measures the number of sales dollars earned for each dollar of assets. The greater the number of sales dollars earned for every dollar of assets, the efficient a firm is in using assets. Profitability Ratios East Point Retail, Inc., sells apparel through companyowned retail stores. Financial information for East Point follows (in thousands): Fiscal Year 3 Fiscal Year 2 Ficeal Year 1 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders' equity is 15.0% for the year ended April 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round your answers to one decimal place. Fiscal Yes 3 Fiscal Year 2 b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round your answers to one decimal place. \begin{tabular}{ll} Fiscal year 3 & N \\ fiscal rear 2 & * \end{tabular} c. The return on stockholders' equity is the return on total assets due to the use of leverage. d. During fiscal Year 3, East Point's results were compared to the industry average. The return on total assets for East Point was than the industry average. The return on stockholders' equity was than the industry average. These relationships suggest that East Point has leverage than the industry, on average
