Edit question 5 5 Eleanors Computers is a retailer of computer products Using the financial data provided, complete the financial ratio calculations for 2016 Advise management of any ratios that indicate potential problems and provide an explanation of possible causes of the problems You are required to calculate ratios for 2016 Please complete these calculations in Excel Please provide the formulas for each ratio I will deduct points if you do not provide the formulas Additionally, you are to advise management of any ratios that indicate a potential problems and provide an explanation of possible causes of the problems This section should not be lengthy You do not have enough information to conduct an in depth analysis Choose at least five (5) ratios to comment on Complete this requirement in a Word document Upload both files to the link provided here Industry Averages Financial Ratios 2014 2015 2016 2016 Current ratio 1 71X 1 65X 1 70X Quick ratio 0 92X 0 89X 0 95X Average collection period 60 days 60 days 65 days Inventory turnover 4 20X 3 90X 4 50X Fixed asset turnover 3 20X 3 33X 3 00X Total asset turnover 1 40X 1 35X 1 37X Debt ratio 59 20 61 00 60 00 Times interest earned 4 20X 3 70X 4 75X Gross profit margin 25 00 23 00 22 50 Operating profit margin 12 50 12 70 12 50 Net profit margin 6 10 6 00 6 50 Return on total assets 8 54 8 10 8 91 Return on equity 20 93 20 74 22 28 Income Statement for Year Ended 12 31 16 Balance Sheet at 12 31 16 Sales $1,500,000 Cash $ 125,000 Cost of goods sold 1,200,000 Accounts receivable 275,000 Gross profit $ 300,000 Inventory 325,000 Operating expenses 100,000 Current assets $ 725,000 Operating profit $ 200,000 Fixed assets (net) $420,000 Interest expense 72,000 Total Assets $1,145,000 Earnings before tax 128,000 Accounts payable $ 150,000 Income tax (40 ) 51,200 Notes payable 225,000 Net Income $ 76,800 Accrued liabilities 100,000 Current liabilities 475,000 Long term debt 400,000 Total liabilities $ 875,000 Equity 270,000 Total liabilities and equity $1,145,000

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 01, 2024

Edit question 5.5 Eleanors Computers is a retailer of computer products. Using the financial data provided, complete the financial ratio calculations for 2016. Advise management

Edit question

5.5 Eleanors Computers is a retailer of computer products. Using the financial data provided, complete the financial ratio calculations for 2016. Advise management of any ratios that indicate potential problems and provide an explanation of possible causes of the problems.

You are required to calculate ratios for 2016. Please complete these calculations in Excel. Please provide the formulas for each ratio. I will deduct points if you do not provide the formulas. Additionally, you are to advise management of any ratios that indicate a potential problems and provide an explanation of possible causes of the problems.This section should not be lengthy. You do not have enough information to conduct an in-depth analysis. Choose at least five (5) ratios to comment on. Complete this requirement in a Word document. Upload both files to the link provided here.

				Industry Averages
Financial Ratios	2014	2015	2016	2016
Current ratio	1.71X	1.65X		1.70X
Quick ratio	0.92X	0.89X		0.95X
Average collection period	60 days	60 days		65 days
Inventory turnover	4.20X	3.90X		4.50X
Fixed asset turnover	3.20X	3.33X		3.00X
Total asset turnover	1.40X	1.35X		1.37X
Debt ratio	59.20%	61.00%		60.00%
Times interest earned	4.20X	3.70X		4.75X
Gross profit margin	25.00%	23.00%		22.50%
Operating profit margin	12.50%	12.70%		12.50%
Net profit margin	6.10%	6.00%		6.50%
Return on total assets	8.54%	8.10%		8.91%
Return on equity	20.93%	20.74%		22.28%

Income Statement for Year Ended 12/31/16		Balance Sheet at 12/31/16
Sales	$1,500,000	Cash	$ 125,000
Cost of goods sold	1,200,000	Accounts receivable	275,000
Gross profit	$ 300,000	Inventory	325,000
Operating expenses	100,000	Current assets	$ 725,000
Operating profit	$ 200,000	Fixed assets (net)	$420,000
Interest expense	72,000	Total Assets	$1,145,000
Earnings before tax	128,000	Accounts payable	$ 150,000
Income tax (40%)	51,200	Notes payable	225,000
Net Income	$ 76,800	Accrued liabilities	100,000
		Current liabilities	475,000
		Long-term debt	400,000
		Total liabilities	$ 875,000
		Equity	270,000
		Total liabilities and equity	$1,145,000