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 | |||||
Balance Sheet | |||||
May 31, 2021 | |||||
Liabilities | |||||
Assets | Accounts payable | $108,900 | |||
Cash | $48,250 | Wages payable | 4,200 | ||
Accounts receivable | 122,500 | Taxes payable | 13,080 | ||
Inventory | 99,780 | 126,180 | |||
270,530 | Long term note payable | 88,000 | |||
Long term investments | 20,000 | ||||
Property, plant & equipment | 250,000 | 214,180 | |||
Less Accumulated depreciation | (75,000) | ||||
195,000 | Shareholders equity | ||||
Common shares | 120,000 | ||||
$465,530 | Retained earnings | 131,350 | |||
251,350 | |||||
$465,530 |
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 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started