Scully Corporation\'s comparative balance sheets are presented below. SCULLY COR

Question

Scully Corporation's comparative balance sheets are presented below.

SCULLY CORPORATION
Balance Sheets
December 31

2010 2009
Cash $ 3,433 $ 3,389
Accounts receivable 21,300 23,481
Inventory 10,081 6,560
Land 20,235 26,486
Building 70,370 70,370
Accumulated depreciation (15,170) (10,507)
Total $110,249 $119,779

Accounts payable $ 11,976 $ 31,379
Common stock 74,450 70,940
Retained earnings 23,823 17,460
Total $110,249 $119,779


Scully's 2010 income statement included net sales of $111,340, cost of goods sold of $59,759, and net income of $15,948.

Instructions

Compute the following ratios for 2010. (a) Current ratio. (b) Acid-test ratio. (c) Receivables turnover. (d) Inventory turnover. (e) Profit margin. (f) Asset turnover. (g) Return on assets. (h) Return on common stockholders' equity. (i) Debt to total assets ratio. (Round answers to 1 decimal place, e.g. 10.5.)

current ration
acid test ration
reveibalbes turnover
inventory turnover
profit margin
asset turnover
return on assets
return on common stockholders equity
debt to total assets ratio

Explanation / Answer

Current Ratio = 2.612976
Current Assets/Current Liabilities
(3433+21300+6560)/11976 = 2.612976

Acid Test Ratio = 2.065214
(Current Assets - Inventory - Prepaid Expenses) / Current Liabilities
(3433+21300)/11976 = 2.065214

Receivables Turnover Ratio = 4.972645
Credit Sales/Average Receivables
111,340/[0.5(21,300+23,481)] = 4.972645

Inventory Turnover Ratio = 7.18214
COGS/Average Inventory
59,759/[0.5(10,081+6,560)] = 7.18214

Profit Margin Ratio = 0.143237
Net Income / Revenue
15,948/111,340

Asset Turnover Ratio = 1.009896
Revenue/Total Assets
111,340/[3433+21,300+10,081+20,235+70,370-15,170] = 1.009896

Return on Assets = 0.144654
Net Income/Total Assets
15,948/[3433+21,300+10,081+20,235+70,370-15,170] = 0.144654

Return on Equity = 0.219382
Net Income/Average SHE
15,948/[0.5(74,450+70,940)] = 0.219382

Debt to Assets Ratio = 0.108627
Total Liabilities/Total Assets
11,976/[3433+21,300+10,081+20,235+70,370-15,170] = 0.108627

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