Question
I need to understand how to calculate the ratios at the end Instructions: Calculate the ratios at the with the information given. 2 Write one
I need to understand how to calculate the ratios at the end
Instructions:
- Calculate the ratios at the with the information given.
- 2 Write one sentence next to each ratio you calculated in Question 1 describing what that number means in words.
- For example, if you calculate the average collection period as 40, you should write something like "on average, it takes 40 days for Freemont Corporation to collect its accounts receivable."
Balance Sheet ($000)
Assets
Cash $1,500
Marketable securities $2,500
Accountsreceivable $15,000
Inventory $33,000
Total current assets $52,000
Fixed assets (net) $35,000
Total assets $87,000
Income Statement ($000)
Sales (all on credit) $130,000
Cost of sales $103,000
Gross margin $27,000
Operating expenses* $16,000
EBIT $11,000
Interest $3,000
EBT $8,000
Income Tax $3,000
EAT $5,000
* includes 200 in lease payments
Liabilities and Equity
Accounts payable $12,500
Notes payable $12,500
Total current liabilities $25,000
Long-term debt $22,000
Total liabilities $47,000
Common stock (par value) $5,000
Contributed capital in excess of par $18,000
Retained earnings $17,000
Total stockholders' equity $40,000
Total liabilities and stockholders' equity$87,000
Other Info
Stock Price $9.50
Book value/share $8.00
Number of shares 5,000 in thousands
Ratios Calculation
Liquidity ?
Current ?
Quick ?
Asset Management
Average collection period ?
Inventory turnover ?
Fixed-asset turnover ?
Total asset turnover ?
Financial Leverage
Debt ?
Debt-to-equity ?
Times interest earned ?
Fixed charge coverage ?
Profitability
Gross profit margin ?
Net profit margin ?
Return on investment ?
Return on stockholders' equity ?
Market-based
Price-to earnings ?
Market price-to-book ?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To calculate the ratios well use the information provided in the balance sheet and income statement Here are the calculations for each ratio Liquidity Current Ratio Total Current Assets Total Current ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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