Consolidated Balance sheets - Thomason Inc 31-Dec 1997 % 1996 % Assets Cash $50,
ID: 2574181 • Letter: C
Question
Consolidated Balance sheets - Thomason Inc
31-Dec
1997
%
1996
%
Assets
Cash
$50,000
6.13%
$46,000
5.93%
Accounts receivable
$94,000
11.52%
$86,000
11.08%
Inventories
$128,000
15.69%
$120,000
15.46%
Prepaid expenes & other rec
$14,000
1.72%
$12,000
1.55%
Total Current Assets
$286,000
35.05%
$264,000
34.02%
Property Plant & Equip
$504,000
61.76%
$482,000
62.11%
intangible
$26,000
3.19%
$30,000
3.87%
Land
$0
0.00%
$0
0.00%
Total assets
$816,000
$776,000
Liabilities & Shareholder Equity
Current liabilities
$144,000
17.65%
$140,000
18.04%
Long term liabilities
$180,000
22.06%
$180,000
23.20%
Total liabilities
$324,000
39.71%
$320,000
41.24%
Shareholder's investment
preferred stock
$100,000
12.25%
$100,000
12.89%
Class B nonvoting Pref stock
Common Stock
$180,000
22.06%
$180,000
23.20%
Additional paid in capital
$34,000
4.17%
$34,000
4.38%
Retained earnings
$178,000
21.81%
$142,000
18.30%
Total Shareholder's equity
$492,000
60.29%
$456,000
58.76%
Total Liab and S/holder's equity
$816,000
100%
$776,000
100%
18,000 common shares outstanding
Consolidated Income Statements - Thomason
30-Jun
1997
%
Net sales
$800,000
100%
Cost of goods sold
$485,000
60.63%
Marketing, research, administrative &oth
$0
0.00%
GM
$315,000
39.38%
Op exp
$244,000
30.50%
EBIT
$71,000
8.88%
Int exp
$11,000
Income before taxes
$60,000
7.50%
Tax
$20,000
2.50%
Net Income
$40,000
5.00%
I.
The AIR turnover ratio for 1997 is:
A. 8.5
B 8.9
C 9.3
D 4.4
II
The number of days sales in AIR for 1997 to nearest whole day:
A 43
B 41
C 18
D
27
III
The inventory turnover ratio for 1997
A 3.91
B 4.04
C 3.68
D 0.79
IV
The current ratio for 1997 is
A .83:1
B .85:1
C 1.13:1
D 1.99:1
V.
Total Assets turnover ratio for 1997
A 1.04
B 0.07
C 1.01
D 0.05
VI.
The percentage of net income to net sales for 1997
A 100.00%
B 7.50%
C 2.50%
D 5.00%
VII.
The rate of return on assets for 1997
A 8.90%
B 1.63%
C 16.80%
D 5.21%
VIII.
Debt to Equity Ratio: Leverage
A 36.59%
B 65.80%
C 12.50%
D 39.71%
IX
The earnings per share of common stock for 1997 (assumes no preferred dividends paid)
A $2.22
B $0.35
C $1.94
D $0.40
X
The times interest earned ratio for 1997
A 6.45
B 9
C 7.81
D 5.42
Ratios for 1997
Name of ratio
Numerator
Denominator
Ratio/$
Accounts Receivable turnover
Number of days sales in A/R for 1997
Inventory turnover ratio
Current ratio
Total Asset turnover
Percentage of net inc to net sales
Return on assets
Debt to Equity
EPS (basic)
Times interest earned ratio
Consolidated Balance sheets - Thomason Inc
31-Dec
1997
%
1996
%
Assets
Cash
$50,000
6.13%
$46,000
5.93%
Accounts receivable
$94,000
11.52%
$86,000
11.08%
Inventories
$128,000
15.69%
$120,000
15.46%
Prepaid expenes & other rec
$14,000
1.72%
$12,000
1.55%
Total Current Assets
$286,000
35.05%
$264,000
34.02%
Property Plant & Equip
$504,000
61.76%
$482,000
62.11%
intangible
$26,000
3.19%
$30,000
3.87%
Land
$0
0.00%
$0
0.00%
Total assets
$816,000
$776,000
Liabilities & Shareholder Equity
Current liabilities
$144,000
17.65%
$140,000
18.04%
Long term liabilities
$180,000
22.06%
$180,000
23.20%
Total liabilities
$324,000
39.71%
$320,000
41.24%
Shareholder's investment
preferred stock
$100,000
12.25%
$100,000
12.89%
Class B nonvoting Pref stock
Common Stock
$180,000
22.06%
$180,000
23.20%
Additional paid in capital
$34,000
4.17%
$34,000
4.38%
Retained earnings
$178,000
21.81%
$142,000
18.30%
Total Shareholder's equity
$492,000
60.29%
$456,000
58.76%
Total Liab and S/holder's equity
$816,000
100%
$776,000
100%
Explanation / Answer
(l) Accounts receivable turnover ratio
= Net credit sales/Average Accounts receivable
= 800000/(94000+86000/2)= 8.9
Note: Assumed that entire sales is on credit.
Answer: Option (B)
(ll) Number of days sales in Accounts receivable
= Number of days in the year/Accounts receivable turnover ratio
= 365/8.9= 41
Answer: Option (B)
(III) Inventory turnover ratio
= Cost of goods sold/average inventory
= 485000/(128000+120000/2) = 3.91
Answer: Option(A)
(IV) Current ratio= Total current assets/Total current liabilities
= 286000/144000= 1.99:1
Answer: Option(D)
(V) Total assets turnover ratio
= Net sales/Average Total assets
= 800000/(816000+776000/2)
= 1.01
Answer: Option(C)
(VI) (Net income × 100)/Net sales
= (40000×100)/800000 = 5%
Answer: Option(D)
(VII) Rate of return on assets
= (Net income × 100)/Average Total assets
= (40000×100)/(816000+776000/2)
= (40000×100)/796000= 5.21%
Answer: Option (D)
(VIII) Debt/Equity= Total liabilities/Total shareholder's fund
= 324000/492000 = 65.80%
Answer: Option (B)
(IX) Earning per share on Common stock
= Total earnings/ Outstanding common stock
= (Net income - preferred dividend)/outstanding common stock
= (40000 - 0)/18000 = $2.22
Answer: Option(A)
(X) Times interest earned ratio
= EBIT/Total Interest payable
= 71000/11000 = 6.45
Answer: Option(A)
Name of the ratio Numerator Denominator Ratio/$ Accounts Receivable ratio 8.9 1 8.91 Number of days sales in Accounts receivable for 1997 41 1 41:1 Inventory turnover ratio 3.91 1 3.91:1 Current ratio 1.99 1 1.99:1 Total assets turnover 1.01 1 1.01:1 Percentage of net income to net sales 5 100 5:100 Return on assets 5.21 100 5.21:100 Debt to equity 65.80 100 65.80:100 EPS(basic) $2.22 1 $2.22 Times interest earned ratio 6.45 1 6.45:1Related Questions
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