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Selected current year-end financial statements of CoCo Corporation are provided as followings. All sales were on credit; selected balance sheet amounts at December 31
Selected current year-end financial statements of CoCo Corporation are provided as followings. All sales were on credit; selected balance sheet amounts at December 31 of the prior year were: accounts receivable net $70,000; inventory $56,900; total assets $352,000; ordinary shares $200,000, and retained earnings $53,500. CoCo Corporation Balance Sheet At December 31, 2022 Assets Cash 20,000 Accounts payable 35,400 Short-term investments 15,000 Accrued wages payable 6,800 Accounts receivable, net 68,800 Income taxes payable 6,200 Merchandise inventory 67,500 Long-term note payable 123,000 Prepaid expenses 4,500 Share capital 200,000 Property, plant and equipment, net 289,200 Retained earnings 93,600 Total assets 465,000 Total liabilities and 465,000 equity CoCo Corporation Income Statement 2022 2021 Sales 686,500 638,445 Cost of goods sold 352,300 331,162 Gross profit 334,200 307,283 Operating expenses 205,500 170,565 Interest expenses 7,995 7,995 Profit before taxes 120,705 128,723 Profit tax expense 36,211 38,617 Net profit $84,494 $90,106 Required: (1) Compute the following: (round the ratios to one decimal) a. current ratio, b. acid-test ratio, c. days' sales uncollected, d. accounts receivable turnover, e. inventory turnover, f. days' sales in inventory g. debt-to-equity ratio, h. times interest earned, i. profit margin ratio, j. total asset turnover, (14 marks) k. return on total assets, 1. return on ordinary shareholders' equity, m. price-earnings ratio (assume stock price is $25 per share, and 100,000 shares are outstanding) n. dividend ratio (assume annual dividend is $0.4 per share) (2) Analyze which items are most responsive for the decline in net profit and how the company can improve the operation efficiency. (6 marks)
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