Exercise 13-13 The condensed financial statements of Sunland Company for the yea

Question

Exercise 13-13 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 $330 $360 570 500 600 530 160 1,630 1,550 Cash and cash equivalents Accounts receivable (net) Prepaid expenses 130 Total current assets Property, plant, and equipment (net) 410 110 530 110 510 $2,680$2,550 $920 890 520 1.140 1,140 $2.680 $2,550 Intangibles and other assets Total assets Current liabilities Long-term liabilities Stockholders' equity-common 620 Total liabilities and stockholders' equity SUNLAND COMPANY 0 888 F 3 5 6

Explanation / Answer

calculation of ratios 2017 2016 1 current ratio current assets / current liabilities 1630/920 1550/890 1.77 1.74 2 inventory turnover ratio cost of goods sold / average inventory average inventory (opening inventory + closing inventory ) / 2 (600+530)/2 (530+450)/2 565 490 inventory turnover ratio 1070/565 990/490 1.89 times 2.02 times 3 profit margin net income / net sales 276/3940 156/3600 7.01% 4.33% 4 return on assets net income / average total assets average total assets (opening assets + closing assets ) / 2 (2680+2550)/2 (2550+2350)/2 2615 2450 return on assets 10.55% 6.37%

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