Crystal s frozen foods reporting the fiscal years ended in September 30, 2011 an
ID: 2351134 • Letter: C
Question
Crystal s frozen foods reporting the fiscal years ended in September 30, 2011 and September 30, 2010.
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September 30 ( in millions)
2011
2010
Accounts receivable
21,265
13,802
Inventory
45,692
47,682
Current assets
185,716
155,716
Current liabilities
80,954
72,263
Long-tern liabilities
15,251
17,852
Shareholders equity
21,871
58,035
Sales
88,455
70,223
Cost of goods sold
60,463
52,750
Interest expense
21.5
43.2
Net income
1,842
1,006
Assume all sales are on credit, and the firm has no outstanding preferred stock.
Calculate the following ratios.
A) Current ratio (for both years)
B) Accounts receivable turnover ratio (for 2011)
C) Inventory turnover (for 2011)
D) Debt to equity ratio (for both years)
E) Return on equity ratio (for 2011)
September 30 ( in millions)
2011
2010
Accounts receivable
21,265
13,802
Inventory
45,692
47,682
Current assets
185,716
155,716
Current liabilities
80,954
72,263
Long-tern liabilities
15,251
17,852
Shareholders equity
21,871
58,035
Sales
88,455
70,223
Cost of goods sold
60,463
52,750
Interest expense
21.5
43.2
Net income
1,842
1,006
Explanation / Answer
THESE ARE 100% CORRECT
a) Total current assets / total current liabilities
2010: 155,716 / 72,263 = 2.2
2011: 185,716 / 80,954 = 2.3
b) Net credit sales / Average net accounts receivable
2011: 88,455 / ((21,265 + 13,802)/2) = 5.0
c) Cost of goods sold / Average inventory
2011: 60,463 / ((45,692 + 47,682)/2) = 1.3
d) Total liabilities / Total shareholders
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