The condensed financial statements of Sunland Company for the years 2016 and 201

Question

The condensed financial statements of Sunland Company for the years 2016 and 2017 are presented below. SUNLAND COMPANY Balance Sheets December 31 (in thousands) 2017 2016 Current assets $360 500 530 160 1,550 380 110 510 $2,680 $2,550 $890 520 1,140 $2,680$2,550 $330 570 600 130 1,630 410 110 530 Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses Total current assets Property, plant, and equipment (net) Investments Intangibles and other assets Total assets Current liabilities Long-term liabilities Stockholders' equity-common $920 620 1,140 Total liabilities and stockholders' equity SUNLAND COMPANY Income Statements For the Year Ended December 31 (in thousands) 2017 2016 Sales revenue $3,940$3,600 Costs and expenses Cost of goods sold Selling & administrative expenses Interest expense 1,070 2,400 10 990 2,330 20

Explanation / Answer

COMPUTATION OF THE FOLLOWING RATIOS FOR 2017 AND 2016:

(156 / 1,035) * 100 = 15.07%

(*) 1,035 = 930 + 1,140 /2

RATIOS FORMULA 2017 2016 Current Ratio Current Assets / Current Liabilities 1,630 / 920 = 1.77:1 1,550 / 890 = 1.74:1 Inventory Turnover Cost of goods sold / Average Inventory 1,070 / 565 = 1.89 times 990 / 490 = 2.02 times Profit Margin (Net Income / Sales revenue) * 100 (276 / 3,940) * 100 = 7% (156 / 3600) * 100 = 4.33% Return on Assets (Net Income / Average Total Assets) * 100 (276 / 2,615) * 100 = 10.55% (156 / 2,450) * 100 = 6.36% Return on common stockholder's Equity (Net Income / Shareholder's equity) *100 (276 / 1,140) * 100 = 24.21%

(156 / 1,035) * 100 = 15.07%

(*) 1,035 = 930 + 1,140 /2

Debt to Assets Ratio (Total debt / Total Assets) * 100 (1,540 / 2,680) * 100 = 57.46% (1,410 / 2,550) * 100 = 55.29% Times interest earned Income before interest / Total interest expense 470 / 10 = 47times 280 / 20 = 14times

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