Question
The following information is available for viru Company Limited for the year ended May 31, 2021: Viru Company Limited Income Statement For the Year Ended
The following information is available for viru Company Limited for the year ended May 31, 2021:
Viru Company Limited | |
Income Statement | |
For the Year Ended May 31, 2021 | |
Sales | $888,900 |
Cost of goods sold | 446,200 |
442,700 | |
Amortization expense | 48,000 |
Operating expenses | 316,800 |
Total operating expenses | 364,800 |
77,900 | |
Interest expense | 12,500 |
65,400 | |
Income taxes | 13,080 |
$52,320 |
| Viru Company Limited |
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Balance Sheet |
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May 31, 2021 |
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Liabilities |
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Assets | Accounts payable | $108,900 |
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Cash | $48,250 | Wages payable | 4,200 |
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Accounts receivable | 122,500 | Taxes payable | 13,080 |
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Inventory | 99,780 |
| 126,180 |
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270,530 | Long term note payable | 88,000 |
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Long term investments | 20,000 |
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Property, plant & equipment | 250,000 |
| 214,180 |
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Less Accumulated depreciation | (75,000) |
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195,000 | Shareholders equity |
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Common shares | 120,000 |
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$465,530 | Retained earnings | 131,350 |
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| 251,350 |
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|
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| $465,530 |
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Additional information:
- All sales were credit sales and normal terms are net 30 days from date of invoice.
- The companys accounts receivable at May 31, 2020 were $102,600.
- The inventory at May 31, 2020 was $79,800.
- The total assets at May 31, 2020 were $364,900.
- Shareholders equity was $241,620 at May 31, 2020.
- Total shares outstanding at May 31, 2020 & May 31, 2021 were 12,000.
- The market price per share is $60.
Required:
1. Calculate any 12 ratios from the list of ratios discussed in class.
2. Choose 4 of the ratios calculated in Part 1 & discuss. Limited industry averages & prior year ratios are listed below to assist you in your analysis.
| Industry averages -2021 | Abu Company Limited May 31, 2020 |
Gross profit margin ratio | 47.0% | 51% |
Return on sales (net profit margin) | 5% | 6.5% |
Times interest earned | 8 | 10 |
Debt ratio | .55 | .42 |
# of days sales in inventory | 60 days | 65 days |
Current ratio | 1.5 | 2.6 |
Quick Ratio | 1.15 | 1.62 |
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