Find the following financial ratios for Smolira Golf Corp. (use year-end figures

Question

Find the following financial ratios for Smolira Golf Corp. (use year-end figures rather than average values where appropriate): (Enter your profitability ratio answers as a percent rounded to 2 decimal places, e.g., 32.16. Round the remaining answers to 2 decimal places, e.g., 32.16.)

  

  

  

  

  

Find the following financial ratios for Smolira Golf Corp. (use year-end figures rather than average values where appropriate): (Enter your profitability ratio answers as a percent rounded to 2 decimal places, e.g., 32.16. Round the remaining answers to 2 decimal places, e.g., 32.16.)

Some recent financial statements for Smolira Golf Corp. follow. SMOLIRA GOLF CORP 2014 and 2015 Balance Sheets Assets Liabilities and Owners' Equit 2014 2015 2014 2015 Current assets Current liabilities Cash Accounts receivable Inventory $24,106 13,048 26,342 $ 24,700 15,800 27,700 Accounts payable Notes payable Other $ 23,784 16,000 12,171 $ 27,700 11,400 15,900 Total $63,496 $68,200 Total $ 51,955 $55,000 $ 75,000 $ 90,000 Long-term debt Owners' equity Common stock and paid-in surplus Accumulated retained earnings $ 45,000 222,236 $45,000 242,000 Fixed assets Net plant and equipment $330,695 $363,800 Total $267,236 $287,000 lotal assets $394,191 $432,000 Total liabilities and owners' equity $394,191 $432,000 SMOLIRA GOLF CORP 2015 Income Statement Sales Cost of goods sold Depreciation $367,234 235,500 38,600 Earnings before interest and taxes Interest paid $93,134 14,900 Taxable income Taxes (30%) $ 78,234 23,470 Net income $ 54,764 Dividends Retained earnings $ 35,000 19,764

Explanation / Answer

A)

Current ratio= Current Assets / Current Liabilities

2014 Current ratio = $63,496 /$51,955 = 1.22 :1

2015 Current ratio = $68,000 / $55,000 = 1.23 : 1

B)

Quick ratio = (Current Assets - Inventory ) / Current Liabilities

2014 Current ratio = ($63,496 - 26,342) /$51,955 = 0.71 : 1

2015 Current ratio = ($68,000 - 27,700) / $55,000 = 0.73 : 1

C)

Cash ratio = Cash / Current Liabilities

2014 Cash Ratio = $24,106 / $51,955 = 0.4639

2015 Cash Ratio = $24,700 / $55,000 = 0.4490

D)

Total Asset Turnover = Net Sales / Total Assets

TAT = $367,234 / $432,000 = 0.8500

E)

Inventory turnover = Cost of goods sold / Inventory

Inventory turnover = $235,500 / 27,700 = 8.50 Times

F)

Receivables turnover = Net Sales / Accounts Receivable

Receivables turnover = $367,234 / $15,800 = 23.24 times

G)

Total debt ratio = Total Debt / Total Assets

2014 Total debt ratio = (51,955+75,000) / 394,191 = 0.3220

2015 Total debt ratio = (55,000+90,000) / 432,000 = 0.3356

H)

Debt–equity ratio = Total Debt / Total Equity

2014 Debt–equity ratio =(51,955+75,000) / 267,236 = 0.4750

2015 Debt–equity ratio =(55,000+90,000) / 287,000 = 0.5052

I)

Equity multiplier = 1+ Total Debt / Total Equity

2014 Debt–equity ratio = 1+(51,955+75,000) / 267,236 = 1.4750

2015 Debt–equity ratio = 1+(55,000+90,000) / 287,000 = 1.5052

J)

Times interest earned = EBIT / Interest

Times interest earned = $93,134 / 14,900 = 6.25 Times

K)

Cash coverage ratio = (EBIT + Depriciation) / Interest

Cash coverage ratio =( $93,134 + 38,600) / 14,900 = 8.84 times

L)

Profit margin = Net Income / Net sales

Profit margin = $54,764 / $367,234 = 14.91%

M)

Return on assets = Net Income / Total Assets

Return on assets = $54,764 / $432,000 = 12.67%

N)

Return on equity = Net Income / Total Equity

Return on equity = $54,764 / $287,000 = 19.08%

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