The balance sheet and income statement for Chico Electronics are reproduced below (tax rate is 40%).

Required:
Compute and interpret the following financial ratios of the company for Year 5:
a. Acid-test ratio
b. Return on assets
c. Return on common equity
d. Earnings per share
e. Gross profit margin ratio
f. Times interest earned
g. Days to sell inventory
h. Long-term debt to equity ratio
i. Total debt to equity
j. Sales to end-of-year working capital

Transcribed Image Text:

CHICO ELECTRONICS Balance Sheet (S thousands) As of Decomber 31 Year 4 Year 5 Assets Current assets Cash ccounts receivable 683 325 ....**.nuu1490 3,599 2,423 1415 Prepaid expenses Total current assets Property, plant and equipment, net Other assets Total assets 3,603 6,360 1,066 1541 157 S4,792 $8,058 Liabilities and Shareholders Equity Current liabilities S 875 116 Notes payable to bank Current pertion of long-term debt Accounts payable Estimated income tax liability Accrued expenses Customer advance payments Total current liabilities 472 576 1,72 3,945 179 Long-term debt Other liabilities Total liabilities Shareholders' equity 1,924 4,255 Comnon stock, $1.00 par value; 1,000,000 shares authorized 550,000 and 829,000 outstanding, respectively Preferred stock, Series A 10%; $25 par value, 25,000 authorized: 20,000 and 18,000 outstanding, respectively Additional paid-in capital Retained earnings Total shareholders' equity 575 1,368 1,949 2.868 3803 $4,792 $8,058 450 Total liabilities and shareholders' equity CHICO ELECTRONICS Income Statement (S thousands) For Years Ending December 31 Year 4 Year 5 $7,570 $12,065 345 7,831 12,410 8,048 Net sales Other income, net Total revenues... Cost of goods sold General, administrative, and 261 4,850 1,531 2,025 78 6,403 10,151 1,428 2,259 994 800 1,265 marketing expense Interest expense ···· Total costs and expenses Net income before tax Income tax Net income 628