| Given the financial statements for Jones Corporation and Smith Corporation: | *Use net fixed assets in computing fixed asset turnover. | | Includes $11,200 in lease payments. | | JONES CORPORATION | | Current Assets | Liabilities | | Cash | $ | 129,600 | Accounts payable | $ | 120,000 | | Accounts receivable | | 81,100 | Bonds payable (long term) | | 82,100 | | Inventory | | 55,400 | | | | | Long-Term Assets | Stockholders' Equity | | Fixed assets | $ | 564,000 | Common stock | $ | 150,000 | | Less: Accumulated depreciation | | (154,300) | Paid-in capital | | 70,000 | | Net fixed assets* | | 409,700 | Retained earnings | | 253,700 | | |
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| | Total assets | $ | 675,800 | Total liabilities and equity | $ | 675,800 | | |
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| | | | Sales (on credit) | $ | 1,313,000 | | Cost of goods sold | | 736,000 | | |
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| | Gross profit | | 577,000 | | Selling and administrative expense | | 329,000 | | Less: Depreciation expense | | 55,200 | | |
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| | Operating profit | | 192,800 | | Interest expense | | 9,900 | | |
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| | Earnings before taxes | | 182,900 | | Tax expense | | 95,100 | | |
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| | Net income | $ | 87,800 | | |
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| | SMITH CORPORATION | | Current Assets | Liabilities | | Cash | $ | 37,300 | Accounts payable | $ | 83,300 | | Marketable securities | | 10,100 | Bonds payable (long term) | | 269,000 | | Accounts receivable | | 70,500 | | | | | Inventory | | 84,800 | | | | | Long-Term Assets | Stockholders' Equity | | Fixed assets | $ | 552,000 | Common stock | $ | 75,000 | | Less: Accumulated depreciation | | (259,400) | Paid-in capital | | 30,000 | | Net fixed assets* | | 292,600 | Retained earnings | | 38,000 | | |
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| | Total assets | $ | 495,300 | Total liabilities and equity | $ | 495,300 | | |
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| | *Use net fixed assets in computing fixed asset turnover. | | SMITH CORPORATION | | Sales (on credit) | $ | 1,100,000 | | Cost of goods sold | | 624,000 | | |
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| | Gross profit | | 476,000 | | Selling and administrative expense | | 305,000 | | Less: Depreciation expense | | 59,800 | | |
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| | Operating profit | | 111,200 | | Interest expense | | 29,500 | | |
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| | Earnings before taxes | | 81,700 | | Tax expense | | 52,800 | | |
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| | Net income | $ | 28,900 | | |
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| | Includes $11,200 in lease payments. | Compute the following ratios. (Use 360 days for a year. Enter only numeric values rounded to 2 decimal places. Omit the "%" sign in your response.) | | | | | Jones Corp. | Smith Corp. | | Profit margin | | % | | % | | Return on assets (investments) | | % | | % | | Return on equity | | % | | % | | Receivable turnover | | | | | | Average collection period | | days | | days | | Inventory turnover | | | | | | Fixed asset turnover | | | | | | Total asset turnover | | | | | | Current ratio | | | | | | Quick ratio | | | | | | Debt to total assets | | % | | % | | Times interest earned | | | | | | Fixed charge coverage | | | | |
| To which one would you, as credit manager for a supplier, approve the extension of (short-term) trade credit? | In which one would you buy stocks? | | |
