Jeff Corporation’s comparative balance sheets are presented below. JEFF CORPORAT

Question

Jeff Corporation’s comparative balance sheets are presented below. JEFF CORPORATION Balance Sheets December 31 2014 2013 Cash $ 4,000 4,130 Accounts receivable (net) 21,450 23,200 Inventory 10,260 6,980 Land 20,210 26,330 Buildings 69,880 69,880 Accumulated depreciation— buildings (14,650 ) (10,440 ) Total $111,150 $120,080 Accounts payable $ 12,160 $ 30,770 Common stock 75,050 70,470 Retained earnings 23,940 18,840 $111,150 120,080 Jeff’s 2014 income statement included net sales of $112,680, cost of goods sold of $60,930, and net income of $14,520. Compute the following ratios for 2014. Please help with these 4 Asset turnover Return on assets Return on common stockholders’ equity Debt to total assets ratio

Explanation / Answer

Asset Turnover ratio = Net Sales / Average Total Assets
Average total Assets = (111150 + 120080)/2
= 115615
Asset Turnover ratio = 112680/115615 = .97
Return on Assets ratio = Net Income / Average total Assets
= 14520/115615 = 12.56%
Return on Common Stockholder's Equity = Net income / Shareholder's equity
= 14520 / 75050 = .1935
Debt to total Assets ratio= Total Liabilities / Total Assets
= 12160 / 111150 = .109

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