e following partal Income statement and balance sheet information (in S millions

Question

e following partal Income statement and balance sheet information (in S millions) comes from the Annual Report of Saratoga Springs Co. for the year ending 12/31/2016: Year ended 12/31/2016 Net sales Total operating revenue Cost of goods sold Sales, general & administrative Interest expense Income before tax Net Income 17,384 17,384 10,253 2,674 841 1,092 909 12/31/2016 12/31/2015 Cash and cash equivalents Recelvables, net nventorles Land, buildings and equipment at cost, net Total assets 745 1,114 23730 13,347 1400 2.170 1,990 29,290 15,355 11,165 11.165 9.926 798 9.412 9,412 5.026 848 Accounts payable Total current labilities Long-term debt Deferred Income taxes Total labllities Minority Interest Retained earnings Total stockholders' equity 21.889 15.286 499 6.903 401 69 69

Explanation / Answer

Answer 1 Profit Margin for 2016 = Net Income for 2016 / Net Sales for 2016 = $909 / $17384 = 5.2% Answer 2 Receivable turnover ratio for 2016 = Net Sales for 2016 / Average accounts receivables Average accounts Receivables = ($2170 + $745)/2 = $1457.50 Receivable turnover ratio for 2016 = $17384 / $1457.50 = 11.9 times Answer 3 Inventory Turnover ratio = Cost of goods sold / Average Inventory Average Inventory = ($1990 + $1114) / 2= $1552 Inventory Turnover ratio = $10253 / $1552 = 6.6 times

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