Use the following to answer question 16: Elton Corporation Income Statement for

Question

Use the following to answer question 16: Elton Corporation Income Statement for the year ending 12/31/XX (in thousands of dollars) Net sales Operating Costs Depreciation Interest Expense S 2,700 (2,350) 150) EBT Income Tax (40%) 130 Net Income S 78 Dividends to Common Stock-S 58 Elton Corporation Balance Sheet 12/31XX (in thousands of dollars) $100 Accounts Payable Notes Payable Other Current Liabilities 50 Total Current Liabilities $400 150 250 Cash Accounts Receivable 250 Inventory Total Current Assets $1,000 1,100 Long Term Debt Common Stock Retained Earnings Total Liab. & Equity 1,500 Total Fixed Assets $2,500 $2,500 Total Assets Number of shares outstanding = 10,000 shares Price per Share - $100

Explanation / Answer

a. Current ratio `=Total Current asset/Total Current Liabilities `=$1,000/$400 2.50 b. Quick ratio `=(cash+accounts receivable)/Total current liabilities `=($150 + $250)/$400 1.00 c. Total Debt/Total asset ratio `=Lorn term loan/Total assets `=$1,100/$2,500 0.44 d. Inventory Turnover ratio `=Cost of goods sold/Inventory `=(Net sales -operating costs)/Inventory `=($2,700-$2,350)/ $600 0.5833 e. ROE `=Net Income/Equity*100 `=Net Income(Equity+Retained Earnings)*100 `=$78/($800+$200)*100 7.80% f. TIE `=(Earnings before Interest and Tax)/Interest Expense `=(EBT+Interest)/Interest `=($130+$70)/$70 2.86 g EPS `=Net Income/No of shares `=$78,000/10,000 7.8 h Net profit Margin `=Net Income/Net sales*100 `=$78/$2,700*100 2.89% i Market to book ratio `=Market capitalisation/book value per share `=10,000*100/(800,000+200,000)                                                                                           1.00 j Total asset turnover ratio `=Net sales/Total Fixed Assets `=$2,700/$1,500 1.80

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