Exercise 13-13 The condensed financial statements of Blossom Company for the yea

Question

Exercise 13-13 The condensed financial statements of Blossom Company for the years 2016 and 2017 are presente BLOSSOM COMPANY Balance Sheets December 31 (in thousands) 2017 2016 Current assets $360 440 490 160 1,530 1,450 380 50 510 $2,520 $2,390 $830 480 1,080 1,080 $2,520 $2,390 Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses $330 510 560 130 Total current assets Property, plant, and equipment (net) Investments Intangibles and other assets 410 50 530 Total assets Current liabilities Long-term liabilities Stockholders' equity-common $860 580 Total liabilities and stockholders' equity BLOSSOM COMPANY Income Statements For the Year Ended December 31 (in thousands) Policy I?2000-2018JohnwlleyMsons. Inc. All Rights Reserved. A Division of khnwiley.asons, inc.

Explanation / Answer

Calcualtion of Current ratio:

current ratio = total current assets / total current liabilities

Calculation of Inventory turnover ratio -

inventory turnover ratio = Cost of goods sold / Average Inventory

Calcualtion of profit margin:

Calculation of Return on common stock holder's equity -

Return on common stockholder's equity = Net Income / Average Shareholder's equity

Return on Assets:

Return on Assets = Net Income / Total Assets

Calcualtion of Debt to Assets Ratio -

Debt to Assets ratio = Total Debt (Current Liabilities + Long Term liabilities) / Total Assets(Current + Fixed Assets)

Calcualtion of Times Interest Earned :

Times Interest earned = Interest / (Income before income tax + Interest) or EBIT

* Average will be calculated by (opening + closing)/2.

* Last year closing would be next year opening.

Please note all figures are in thousand.

in case of any confusion please comment.

2017 2016 a Current assets (given in question) 1530 1450 b current liabilities (given in question) 860 830 c Current ratio (a/b) 1.78 1.75

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