LIFO method leverage ratios profitability ratios DuPont chart system liquidity r

Question

LIFO method leverage ratios profitability ratios DuPont chart system liquidity ratios activity ratios common-size statements PROBLEMS 3-1 Sally Corporation's financial statements for 2012 are given below: Cash Marketable securities $60 Accounts payable $ 20 60 80 40 $200 40 Notes payable 20 Accrued taxes Accounts receivable Inventories Total current assets 80 Accrued wages $200 $345 Accumulated depreciation45 300 $500 Total current liabilities Gross plant & equipment Long-term debt Common stock $100 100 100 Retained earnings Total assets Total claims on assets $500

Explanation / Answer

3-1)

RATIOS: Formula Calculation Result Currrent ratio CA/CL 200/200 1 quick ratio CA-Inv / CL (200-80)/200 0.6 debt ratio debt / Total Assets 300/500 0.6 times interest earned EBIT / Interest expense 150/50 3 times inventory turnover COS / closing inventory 600/80 7.5 receivable turnover Sales / closing AR 1000/20 50 average collection period 365/receivable turnover 365/50 7.3 days asset turnover Sales/Total assets 1000/500 2 profit margin on sales Net income/Sales 50/1000 0.05 return on equity Net Income/SH Eq. 50/200 0.25 return on assets Net Income / total assets 50/500 0.1

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