Problem #1 Ratios

Lulu, Inc.

Balance Sheets

Ending Balances per years

	2019		2020
Cash	100,000		120,000
Supplies	40,000		35,000
AR	40,000		35,000
Inventory	50,000		60,000
Equipment	150,000		140,000
Total	380,000		390,000
Liabilities
AP	30,000		33,000
Salaries Payable	20,000		22,000
NP	180,000		180,000
Total	230,000		235,000
Equity
Common stock	75,000		75,000
PIC Common	40,000		40,000
Retained Earnings	35,000		40,000
Total	150,000		155,000
Total Liabilities &Equity	380,000		390,000

LuLu. Inc.

Income Statement

For the Year Ended 2020

Sales			1,000,000
COGS			450,000
Gross Margin			550,000
Operating Expense
	Administrative	100,000
	Selling	60,000
	Total		160,000
EBIT			390,000
Interest			10,000
EBT			380,000
Taxes	50% rate		190,000
Operating Income			190,000

Notes:

There are 120,000 shares of Common Stock. 400,000 shares are authorized and 120,000 are issued and outstanding. There is no Treasury Stock or Preferred Stock.

Market price per share is $35.

Dividends of $10,000 were issued.

Assume that Cash Flows from Operating Activities is $210,000.

Capital Expenditures for the year are $65,000.

Required: Compute the ratios for 2020. Compute all ratios as are listed in the front cover page of your textbook.

Required: Highlight, underline, circle, or show you answers that I can easily identify them. Also, show all work to arrive at your answers. Failure to provide work = zero.

Measures short term debe paying alley LIQUIDITY RATIOS Current ratio Current Ames Current Liabilities Quick ratio Cash - Marketable Securities Receivables Current Liabilities Receivables Net Sales tumover Average Accounts Receivable Days' sales 365 Days wcollected Receivables Tumove Chapter 5, LOS Mesures short-term debe paying ability Chapter 16, LOS Chapter 9, L04 Chapter 9, L04 Inventory turnover Chapter 16, LO3 Chapter 16, LOS Chapte 11, LOS Average number of times recewables are turned into cash during an accounting period Average number of days a company must all to receive payment for credit les or to collect accounts receive Cons of Goods Sold Average Inventory Number of times a company's wverage Daya Inventory Days in Accounting Teriod inventory is sold during an accounting period on hand Inventory Turnover Average number of days taken to sell inventory on hand Payables Com of Good Sid. Change in Menbildid Inventory Average amber of times a company pod turnover Average Accounts Payable Days' payable accounts payable in an accounting period 365 Days Average number of days a company takes to pay Payables Turnover is accounts payable PROFITABILITY RATIOS Profit margin Net Income Percentage of each sales dollar that Revenues contributes to net income Asset Revenues How eficiently sets are used to produce sales turnover Average Total Assets Return on Net Income How efficiently a company is acts to produce inconse, or the amount earned on assets Average Toual Acts cach dollar of invested Net Income Relates the amount carned by a business to Return on the owner's investment in the business equity Average Owner's Equity Chapter 11, LOS Chapter 5, LO3 Chapter S, LO3 Chapter 5, LOS Chapter 5, LOS Chapter 5, LOS ratio LONG-TERM SOLVENCY RATIOS Debt to Total Liabilities Proportion of a company's financed equity by credit and the proportion financed by Total Equity the owner Interest Income Before Income Taxes. Interest Expense Degree of peorection company has from default o interese payments coverage Interest Expense ratio Menards company's ability to generate Cashows in relation to come Chapter 14, LOS Chapter 15, LOS Rochows reporting acts Chapter 15, LOS to a CASH FLOW ADEQUACY RATIOS Cash flow Net Cash Flows from Operating Activities yield Net Income Cash flows Ner Cash Hows from Operating Activities to sales Sales Cash flows Net Cash Flows from Operating Activities to assets Average Tocal Aucts Free cash Net Cash Flows from Operating Activities flow Dividende - Net Capital Expenditures Measure the ability of Chapter 15, LOS ging for Marutha thut roh deducing the ha comptato Chapter 15, LOS coperating at its planned Maps Two cock value Chapter 13.08 Mercut Chapter 13. LOR or odbold MARKET STRENGTH RATIOS Price Market Price per Share cang ratio Earnings per Share Dividend Dividende per Share vild Market Price per Share