Liquidity and Profitability Ratios

Julio Company has had poor operating results for the past two years. As Julios accountant, you have the following information available to you:

	2014		2013
Current assets	$49,100		$39,100
Total assets	145,000		110,000
Current liabilities	25,000		12,500
Long-term liabilities	25,000		-
Owners equity	94,500		97,500
Net sales	203,000		153,000
Net income	14,500		9,500

Total assets and owner's equity at the beginning of 2013 were $90,000 and $80,000, respectively. The owner made no investments in 2013 or 2014.

1. Compute the following measures of liquidity for 2013 and 2014: (a) working capital and (b) current ratio. Round your current ratio values to one decimal place.

	2014		2013
a. Working capital	$		$
b. Current ratio

Comment on the differences between the years.

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

2. Compute the following measures of profitability for 2013 and 2014: (a) profit margin, (b) asset turnover, (c) return on assets, (d) debt to equity ratio, and (e) return on equity. Round your answers to one decimal place.

	2014		2013
a. Profit margin		%		%
b. Asset turnover		times		times
c. Return on assets		%		%
d. Debt to equity ratio		%		%
e. Return on equity		%		%

Comment on the change in performance from 2013 to 2014.