Smith's Inc, Inc., produces widgets for the wind chime industry. The company sells all products on accounts with net 30 day terms. The company has been without someone to assess the financial condition for some time (using only a bookkeeper to post activity to the general ledger accounts) and, therefore, is asking you to help with a more current assessment of the company's position.

Part A: Below you will find a series of accounts that represent the trial balance of the business firm. These accounts encompass both income statement and balance sheet accounts.

Accumulated depreciation Retained earnings Sales Cash Bonds payable Accounts receivable Depreciation expense Common stock shares outstanding Plant and equipment, at cost Taxes Accounts payable Common stock, $1 par Inventory Prepaid expenses Cost of goods sold Interest expense Selling and administrative expenses Marketable securities Other current liabilities Capital paid in excess of car (common) I" 2009 176,580 337,602 3,702,480 35,750 421 ,000 246,580 31 ,265 80,000 984,021 79,484 62,685 75,000 185,652 6,575 2,665,786 12,532 765,800 12,545 123,256 275.000 7 201 0 209,050 510,731 3,961 .654 62,635 334,000 293,430 32,470 80,000 1 ,026,880 93,223 1 16,696 75,000 243,1 1 7 21 ,525 2,879,049 10,325 773,458 23,564 1 50,674 275.000 I" 201 1 242,725 648,528 3,981 ,462 86,595 325,000 349,182 33,675 80,000 1,151 ,210 74,198 188,569 75,000 312,622 26,325 2,936,630 10,235 788,927 24,153 195,265 275.000 Ratio Industry Average 1. Profit margin 3.2% 2. Return on assets (use ending assets) 6.0% 3. Return on common equity (use ending common equity) 15.6% 4. Receivable turnover (use ending receivables) 8.5 x 5. Inventory turnover (use ending inventory) 12.0 X 6. Fixed asset turnover (use ending fixed asset balance) 5.75 X 7. Total asset turnover (use ending assets) 1.89 X 8. Current ratio 3.10 9. Quick ratio 1.40 10. Debt to total assets (use ending assets) 37.0%