Given the financial statements for Jones Corporation and Smith Corporation: *Use

Question

Given the financial statements for Jones Corporation and Smith Corporation:  

    

*Use net fixed assets in computing fixed asset turnover.
†Includes $16,100 in lease payments.
  

*Use net fixed assets in computing fixed asset turnover.

   

†Includes $16,100 in lease payments.
  
a. Compute the following ratios. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.)

Jones Corp. Smith Corp.

Profit margin%%  

Return on assets (investments)%%  

Return on equity%%  

Receivable turnover

Average collection period daysdays  

Inventory turnovertimestimes  Fixed asset turnover timestimes  

Total asset turnovertimestimes  

Current ratiotimestimes  

Quick ratiotimestimes

Debt to total assets%%  

Times interest earnedtimestimes  

Fixed charge coveragetimestimes

JONES CORPORATION Current Assets Liabilities Cash $ 127,600 Accounts payable $ 119,000 Accounts receivable 87,100 Bonds payable (long term) 80,100 Inventory 54,300 Long-Term Assets Stockholders' Equity Gross fixed assets $ 594,000 Common stock $ 150,000 Less: Accumulated depreciation 155,700 Paid-in capital 70,000 Net fixed assets* 438,300 Retained earnings 288,200 Total assets $ 707,300 Total liabilities and equity $ 707,300

Explanation / Answer

SMITH CORPORATION Current Assets Liabilities Cash $ 37300 Accounts payable $ 76500 Marketable securities 16100 Bonds payable (long term) 237000 Profit Margin Net Profit/Sales =C23/C14 0.0600917431192661 Accounts receivable 74700 Return on Investments (Sales-GOGS)/COGS =(C14-C15)/C15 0.679506933744222 Inventory 83100 Return on Equity Net profit/Equity =C23/(H8+H9+H10) 0.379270411117545 Long-Term Assets Stockholders' Equity Recievable Turnover Sales on credit/AR =C14/E5 14.5917001338688 Gross fixed assets $ 532000 Common stock $ 75000 Average collection period AR/Sales per day =E5/(C14/360) 24.6715596330275 Less: Accumulated depreciation 257000 Paid-in capital 30000 Inventory turnover Sales/Inventory =C14/E6 13.1167268351384 Net fixed assets* 275000 Retained earnings 67700 Total asset turnover Sales/Total Assets =C14/E11 2.24187577128754 Total assets $ 486200 Total liabilities and equity $ 486200 Current Ratio Current Assset/Current Liability =(E3+E4+E5+E6)/(H3) 2.76078431372549 Quick ration (Current Assset-Inventory)/Current Liability =SUM(E3:E4)/H3 0.698039215686274 SMITH CORPORATION Debt to Total Asset Total Debt/Total asset =SUM(H3:H4)/E11 0.644796380090498 Sales (on credit) $ 1090000 Times interest earned Gross Profit/Interest Charges =C16/C20 18.0737704918033 Cost of goods sold 649000 Fixed Charge coveraged (Gross Profit+Interest Charges+Lease Obligations)/(Interest Charges+Lease Obligation) =(C16+C20+B26)/(C20+B26) 11.8888888888889 Gross profit $ 441000 Selling and administrative expense† 246000 Depreciation expense 58100 Operating profit $ 136900 Interest expense 24400 Earnings before taxes $ 112500 Tax expense 47000 Net income $ 65500 †Includes $16,100 in lease payments. 16100 JONES CORPORATION Current Assets Liabilities Cash $ 127600 Accounts payable $ 119000 Accounts receivable 87100 Bonds payable (long term) 80100 Profit Margin Net Profit/Sales =C23/C14 0.298365122615804 Inventory 54300 Return on Investments (Sales-GOGS)/COGS =(C14-C15)/C15 1.21351025331725 Long-Term Assets Stockholders' Equity Return on Equity Net profit/Equity =C23/(H7+H8+H9) 1.07733175914994 Gross fixed assets Common stock Recievable Turnover Sales on credit/AR =C14/E4 21.0677382319173 Less: Accumulated depreciation 155700 Paid-in capital 70000 Average collection period AR/Sales per day =E4/(C14/360) 17.0877384196185 Net fixed assets* 438300 Retained earnings 288200 Inventory turnover Sales/Inventory =C14/E5 33.7937384898711 Total assets $ 707300 Total liabilities and equity $ 707300 Total asset turnover Sales/Total Assets =C14/E10 2.59437296762336 Current Ratio Current Assset/Current Liability =(E3+E4+E5)/(H3) 2.26050420168067      Quick ration (Current Assset-Inventory)/Current Liability =SUM(E3:E4)/H3 1.80420168067227 Debt to Total Asset Total Debt/Total asset =SUM(H3:H4)/E10 0.28149300155521 Sales (on credit) $ 1835000 Times interest earned Gross Profit/Interest Charges =C16/C20 100.6 Cost of goods sold 829000 Fixed Charge coveraged (Gross Profit+Interest Charges+Lease Obligations)/(Interest Charges+Lease Obligation) =(C16+C20+B26)/(C20+B26) 39.544061302682 Gross profit $ 1006000 Selling and administrative expense† 293000 Depreciation expense 59600 Operating profit $ 653400 Interest expense 10000 Earnings before taxes $ 643400 Tax expense 95900 Net income $ 547500 *Use net fixed assets in computing fixed asset turnover. †Includes $16,100 in lease payments. 16100

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