Question 1 The following are the financial statements of Rigolo Inc. Balance she
ID: 2524405 • Letter: Q
Question
Question 1
The following are the financial statements of Rigolo Inc.
Balance sheet
20116
2015
Assets
Current assets
Cash & cash equivalents
Account receivables
Inventory
Other current assets
Total current assets
L.T. Assets
PPE
Total Assets
Liabilities & Shareholders’ Equity
Current liabilities
Accounts payable
Current maturities of notes payable
Accrued expenses
Other current liabilities
Total current liabilities
L.T. Liabilities
Bank loans
Total liabilities
Shareholders’ equity
Common stock
Retained earnings
Total shareholders equity
Total shareholders equity & liab.
The balance is well-balanced
4,100
2,733,148
1,389,390
13,901
4,140,539
322,586
4,463,125
276,556
1,834,858
151,817
128,632
2,391,863
1,824,764
4,216,627
46,499
199,999
246,498
4,463,125
3,100
1,941,002
1,468,257
0
3,412,359
60,640
3,472,999
256,419
337,881
169,067
161,905
925,272
2,400,000
3,325,272
46,499
101,228
147,727
3,472,999
Statement of income
2016
2015
Revenue
Cost of Good Sold
Gross profit on sales
Operating expenses
Repairs and maintenance
Depreciation & Amortization
Interest expense
Total expenses
Net income before taxes
Provision for income taxes
Net income
$17,285,211
14,947,152
2,338,059
1,871,538
84,483
25,688
215,246
2,196,955
141,104
42,333
98,771
$13,999,979
11,920,400
2,079,579
1,529,231
107,123
24,410
255,003
1,915,767
163,812
65,525
98,287
Rigolo Inc, has paid $10,000 to its preferred shareholders in 2016
Tasks: (i) Compute the ROA
(ii) Compute the ROCE
(iii) Compute the Account Receivable Turnover
(iv) Compute the Inventory Turnover
(v) Compute the Basic EPS
(vi) Compute the diluted EPS
20116
2015
Assets
Current assets
Cash & cash equivalents
Account receivables
Inventory
Other current assets
Total current assets
L.T. Assets
PPE
Total Assets
Liabilities & Shareholders’ Equity
Current liabilities
Accounts payable
Current maturities of notes payable
Accrued expenses
Other current liabilities
Total current liabilities
L.T. Liabilities
Bank loans
Total liabilities
Shareholders’ equity
Common stock
Retained earnings
Total shareholders equity
Total shareholders equity & liab.
The balance is well-balanced
4,100
2,733,148
1,389,390
13,901
4,140,539
322,586
4,463,125
276,556
1,834,858
151,817
128,632
2,391,863
1,824,764
4,216,627
46,499
199,999
246,498
4,463,125
3,100
1,941,002
1,468,257
0
3,412,359
60,640
3,472,999
256,419
337,881
169,067
161,905
925,272
2,400,000
3,325,272
46,499
101,228
147,727
3,472,999
Explanation / Answer
ROA = Net Income x 100 / total assets = 98771 x 100 / 4,463,125 = 2.213%
ROCE =
Capital employed = Total assets - current liabilities = 4,463,125 - 2,391,863 = 2,071,262
operating profit = gross profit - operating expenses = 2,338,059 - 1,871,538 = 466521
2. ROCE = Operating profit x 100 / capital employed = 466521 x 100 / 2071262 = 22.52 %
3. Accounts receivable turnover = Credit sales / average accounts receivable
= 17,285,211 / 2337075 = 7.39
assuming all revenue is sales on credit
average accounts receivable = (2733148 +1941002) / 2 = 2,337,075
4. Inventory turnover = net sales/ average inventory
= 17,285,211 / [(1,389,390+1,468,257) / 2 ]
= 12.097 times
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