Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Salza Technology Corporation Annual Income Statements (in $ Thousands) 2012 2013 Net sales $375 $450 Less: Cost of goods sold -225 -270 Gross profit 150

Salza Technology Corporation

Annual Income Statements (in $ Thousands)

2012

2013

Net sales

$375

$450

Less: Cost of goods sold

-225

-270

Gross profit

150

180

Less: Operating expenses

-46

-46

Less: Depreciation

-25

-30

Less: Interest

-4

-4

Income before taxes

75

100

Less: Income taxes

-20

-30

Net income

$ 55

$70

Cash dividends

$ 17

$ 20

Balance Sheets as of December 31 (in $ Thousands)

2012

2013

Cash

$ 39

$ 16

Accounts receivable

50

80

Inventories

151

204

Total current assets

240

300

Gross fixed assets

200

290

Less accumulated depreciation

95

125

Net fixed assets

105

165

Total assets

$345

$465

Accounts payable

$ 30

$ 45

Bank loan

20

27

Accrued liabilities

10

23

Total current liabilities

60

95

Long-term debt

15

15

Common stock

85

120

Retained earnings

185

235

Total liabilities and equity

$345

$465

2. [Liquidity and Financial Leverage Ratios] Refer to the Salza Technology Corporation in Problem 1.

A. Using average balance sheet account data, calculate the (a) current ratio, (b) quick ratio, (c) total-debt-to-total-assets ratio, and (d) the interest coverage ratio for 2013.

B. Repeat the ratio calculations requested in Part A separately for 2012 and 2013 using year-end balance sheet account data. What changes, if any, have occurred in terms of liquidity and financial leverage?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Concepts For A Changing Environment With IDEA Software

Authors: Larry E. Rittenberg, Bradley J. Schwieger

4th Edition

0387321500, 978-0324180237

More Books

Students also viewed these Accounting questions

Question

Mention two uses of the Clapeyron equation.

Answered: 1 week ago