Crystal s frozen foods reporting the fiscal years ended in September 30, 2011 an

Question

Crystal s frozen foods reporting the fiscal years ended in September 30, 2011 and September 30, 2010. 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

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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