Using Your Judgment 24-3 Incorrect answer. Your answer is incorrect. Try again. RNA Inc. manufactures a variety of consumer products. The companys founders have run the company for 30 years and are now interested in retiring. Consequently, they are seeking a purchaser who will continue its operations, and a group of investors, Morgan Inc., is looking into the acquisition of RNA. To evaluate its financial stability and operating efficiency, RNA was requested to provide the latest financial statements and selected financial ratios. Summary information provided by RNA is as follows. RNA INC. INCOME STATEMENT FOR THE YEAR ENDED NOVEMBER 30, 2015 (IN THOUSANDS) Sales (net) $ 30,600 Interest income 600 Total revenue 31,200 Costs and expenses Cost of goods sold 17,700 Selling and administrative expenses 3,650 Depreciation and amortization expense 1,990 Interest expense 1,000 Total costs and expenses 24,340 Income before taxes 6,860 Income taxes 2,744 Net income $ 4,116 RNA INC. BALANCE SHEET AS OF NOVEMBER 30 (IN THOUSANDS) 2015 2014 Cash $ 500 $ 600 Short-term investments (at cost) 400 300 Accounts receivable (net) 3,300 3,000 Inventory 6,100 5,500 Total current assets 10,300 9,400 Property, plant, & equipment (net) 7,200 7,100 Total assets $ 17,500 $ 16,500 Accounts payable $ 3,800 $ 3,500 Income taxes payable 1,000 900 Accrued expenses 1,800 1,500 Total current liabilities 6,600 5,900 Long-term debt 2,100 1,900 Total liabilities 8,700 7,800 Common stock ($1 par value) 2,800 2,800 Paid-in capital in excess of par 1,100 1,100 Retained earnings 4,900 4,800 Total stockholders equity 8,800 8,700 Total liabilities and stockholders equity $ 17,500 $ 16,500 SELECTED FINANCIAL RATIOS RNA INC. Current Industry Average 2014 2013 Current ratio 1.59 1.60 1.73 Acid-test ratio 0.66 0.6 0.83 Times interest earned 8.65 8.6 8.55 Profit margin on sales 13.3% 12.2% 13.1% Asset turnover 1.94 1.93 1.94 Inventory turnover 3.27 3.31 3.28 (a) Calculate a new set of ratios for the fiscal year 2015 for RNA based on the financial statements presented. (Round answers to 2 decimal places, e.g. 52.75.) Current ratio Entry field with incorrect answer now contains modified data : 1 Acid-test ratio Entry field with incorrect answer now contains modified data : 1 Times interest earned Entry field with incorrect answer now contains modified data Profit margin on sales Entry field with incorrect answer now contains modified data % Asset turnover Entry field with incorrect answer now contains modified data times Inventory turnover Entry field with incorrect answer now contains modified data times