Exercise 9-13

The condensed financial statements of Carla Vista Co. for the years 2016 and 2017 are presented below.

CARLA VISTA CO. Balance Sheets December 31 (in thousands)
		2017		2016
Current assets
Cash and cash equivalents		$330		$360
Accounts receivable (net)		630		560
Inventory		480		410
Prepaid expenses		130		160
Total current assets		1,570		1,490
Property, plant, and equipment (net)		410		380
Investments		170		170
Intangibles and other assets		530		510
Total assets		$2,680		$2,550
Current liabilities		$980		$950
Long-term liabilities		500		400
Stockholders equitycommon		1,200		1,200
Total liabilities and stockholders equity		$2,680		$2,550

CARLA VISTA CO. Income Statements For the Year Ended December 31 (in thousands)
		2017		2016
Sales revenue		$3,820		$3,480
Costs and expenses
Cost of goods sold		1,130		1,050
Selling & administrative expenses		2,400		2,330
Interest expense		10		20
Total costs and expenses		3,540		3,400
Income before income taxes		280		80
Income tax expense		112		32
Net income		$ 168		$ 48

Compute the following ratios for 2017 and 2016. (Round current ratio and inventory turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.)

(a)		Current ratio.
(b)		Inventory turnover. (Inventory on December 31, 2015, was $420.)
(c)		Profit margin.
(d)		Return on assets. (Assets on December 31, 2015, were $2,020.)
(e)		Return on common stockholders equity. (Equity on December 31, 2015, was $970.)
(f)		Debt to assets ratio.
(g)		Times interest earned.

		2017			2016
Current ratio.			:1			:1
Inventory turnover.
Profit margin.			%			%
Return on assets.			%			%
Return on common stockholders equity.			%			%
Debt to assets ratio.			%			%
Times interest earned.			times			times