S S AIR, INC 2017 Income Statement Sales $46,298,115 Cost of goods sold 34,536,913 Other expenses 5,870,865 Depreciation 2,074,853 EBIT $ 3,815,484 Interest 725,098 Taxable income $ 3,090,386 Taxes (25 ) 772,597 Net income $ 2,317,789 Dividends $ 705,000 Add to retained earnings 1,612,789 S S AIR, INC 2017 Balance Sheet Assets Liabilities and Equity Current assets Current liabilities Cash $ 524,963 Accounts payable $ 1,068,356 Accounts receivable 843,094 Notes payable 2,439,553 Inventory 1,235,161 Total current liabilities $ 3,507,909 Total current assets $ 2,603,218 Long term debt $ 6,300,000 Fixed assets Net plant and equipment $20,381,945 Shareholder equity Common stock $ 460,000 Retained earnings 12,717,254 Total equity $13,177,254 Total assets $22,985,163 Total liabilities and equity $22,985,163 Light Airplane Industry Ratios Lower Quartile Median Upper Quartile Current ratio 50 1 43 1 89 Quick ratio 21 35 62 Cash ratio 08 21 39 Total asset turnover 68 85 1 38 Inventory turnover 4 89 6 15 10 89 Receivables turnover 6 27 9 82 14 11 Total debt ratio 41 52 61 Debt equity ratio 68 1 08 1 56 Equity multiplier 1 68 2 08 2 56 Times interest earned 5 18 8 06 9 83 Cash coverage ratio 5 84 9 41 10 27 Profit margin 4 05 5 10 7 15 Return on assets 6 05 9 53 13 21 Return on equity 9 93 15 14 19 15 Compare the performance of S S Air to the industry Suppose you create an inventory ratio calculated as inventory divided by current liabilities How do you think S S Air's ratio would compare to the industry average

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 21, 2024

S&S AIR, INC. 2017 Income Statement Sales $46,298,115 Cost of goods sold 34,536,913 Other expenses 5,870,865 Depreciation 2,074,853 EBIT $ 3,815,484 Interest 725,098 Taxable income

S&S AIR, INC. 2017 Income Statement
Sales		$46,298,115
Cost of goods sold		34,536,913
Other expenses		5,870,865
Depreciation		2,074,853
EBIT		$ 3,815,484
Interest		725,098
Taxable income		$ 3,090,386
Taxes (25%)		772,597
Net income		$ 2,317,789
Dividends	$ 705,000
Add to retained earnings	1,612,789

S&S AIR, INC. 2017 Balance Sheet
Assets		Liabilities and Equity
Current assets		Current liabilities
Cash	$ 524,963	Accounts payable	$ 1,068,356
Accounts receivable	843,094	Notes payable	2,439,553
Inventory	1,235,161	Total current liabilities	$ 3,507,909
Total current assets	$ 2,603,218
		Long-term debt	$ 6,300,000
Fixed assets
Net plant and equipment	$20,381,945	Shareholder equity
		Common stock	$ 460,000
		Retained earnings	12,717,254
		Total equity	$13,177,254
Total assets	$22,985,163	Total liabilities and equity	$22,985,163

Light Airplane Industry Ratios
	Lower Quartile	Median	Upper Quartile
Current ratio	.50	1.43	1.89
Quick ratio	.21	.35	.62
Cash ratio	.08	.21	.39
Total asset turnover	.68	.85	1.38
Inventory turnover	4.89	6.15	10.89
Receivables turnover	6.27	9.82	14.11
Total debt ratio	.41	.52	.61
Debt-equity ratio	.68	1.08	1.56
Equity multiplier	1.68	2.08	2.56
Times interest earned	5.18	8.06	9.83
Cash coverage ratio	5.84	9.41	10.27
Profit margin	4.05%	5.10%	7.15%
Return on assets	6.05%	9.53%	13.21%
Return on equity	9.93%	15.14%	19.15%

Compare the performance of S&S Air to the industry. Suppose you create an inventory ratio calculated as inventory divided by current liabilities. How do you think S&S Air's ratio would compare to the industry average?