Problem 13-23A Ratio analysis LO 13-2, 13-3, 13-4, 13-5

The following financial statements apply to Zachary Company:

	Year 4				Year 3
Revenues
Net sales	$	211,900			$	176,900
Other revenues		9,300				7,000
Total revenues		221,200				183,900
Expenses
Cost of goods sold		124,200				101,800
Selling expenses		20,900				18,900
General and administrative expenses		10,200				9,200
Interest expense		2,700				2,700
Income tax expense		20,300				16,200
Total expenses		178,300				148,800
Net income	$	42,900			$	35,100
Assets
Current assets
Cash	$	4,800			$	7,300
Marketable securities		2,900				2,900
Accounts receivable		36,600				30,900
Inventories		100,900				95,600
Prepaid expenses		3,900				2,900
Total current assets		149,100				139,600
Plant and equipment (net)		106,800				106,800
Intangibles		21,500				0
Total assets	$	277,400			$	246,400
Liabilities and Stockholders Equity
Liabilities
Current liabilities
Accounts payable	$	38,200			$	55,800
Other		15,500				16,700
Total current liabilities		53,700				72,500
Bonds payable		65,000				66,000
Total liabilities		118,700				138,500
Stockholders equity
Common stock (48,000 shares)		114,700				114,700
Retained earnings		44,000				(6,800	)
Total stockholders equity		158,700				107,900
Total liabilities and stockholders equity	$	277,400			$	246,400

Required Calculate the following ratios for Year 3 and Year 4. Since Year 2 numbers are not presented do not use averages when calculating the ratios for Year 3. Instead, use the number presented on the Year 3 balance sheet. a. Net margin. (Round your answers to 2 decimal places.) b. Return on investment. (Round your answers to 2 decimal places.) c. Return on equity. (Round your answers to 2 decimal places.) d. Earnings per share. (Round your answers to 2 decimal places.) e. Price-earnings ratio (market prices at the end of Year 3 and Year 4 were $6.03 and $4.95, respectively). (Round your intermediate calculations and final answers to 2 decimal places.) f. Book value per share of common stock. (Round your answers to 2 decimal places.) g. Times interest earned. Exclude extraordinary income in the calculation as they cannot be expected to recur and, therefore, will not be available to satisfy future interest payments. (Round your answers to 2 decimal places.) h. Working capital. i. Current ratio. (Round your answers to 2 decimal places.) j. Quick (acid-test) ratio. (Round your answers to 2 decimal places.) k. Accounts receivable turnover. (Round your answers to 2 decimal places.) l. Inventory turnover. (Round your answers to 2 decimal places.) m. Debt-to-equity ratio. (Round your answers to 2 decimal places.) n. Debt-to-assets ratio. (Round your answers to the nearest whole percent.)

Year 4 Year 3 % % % % % % times times times times a. Net margin b. Return on investment C. Return on equity d. Earnings per share e. Price-earnings ratio f. Book value g. Interest earned h. Working capital i. Current ratio J. Quick (acid-test) ratio k. Accounts receivable turnover 1. Inventory turnover m. Debt-to-equity ratio Debt-to-assets ratio times times times times n. % %