Problem 4-3 (Algorithmic) 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	$48,600		$38,600
Total assets	145,000		110,000
Current liabilities	18,600		9,300
Long-term liabilities	18,600		-
Stockholders' equity	98,000		100,700
Net sales	200,500		150,500
Net income	18,000		13,000

Total assets and stockholders' equity at the beginning of 2013 were $90,000 and $80,000, respectively. Assume that there was a dividend distribution in 2013.

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

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		%		%