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 $13,500 in lease payments.
  

*Use net fixed assets in computing fixed asset turnover.

   

†Includes $13,500 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 CORPORATION Current Assets Liabilities Cash $ 121,300 Accounts payable $ 122,000 Accounts receivable 81,800 Bonds payable (long term) 82,400 Inventory 54,500 Long-Term Assets Stockholders' Equity Gross fixed assets $ 519,000 Common stock $ 150,000 Less: Accumulated depreciation 151,200 Paid-in capital 70,000 Net fixed assets* 367,800 Retained earnings 201,000 Total assets $ 625,400 Total liabilities and equity $ 625,400

Explanation / Answer

JONES Corporation Smith Corporation Computation of ratios Formula Computation ratio Computation ratio Profit margin net income / net Sales   *100 22300/1252000 1.78% 51100/1290000 3.96% return on assets net income / Total Assets *100 22300/625400 3.57% 51100/498400 10.25% return on Equity net income/ Equity   *100 22300/421000 5.30% 51100/202200 25.27% Receivables Turnover net sales / average receivables 1252000/81800 15.31 Times 1290000/75700 17.04 Times Average Collection period 365/ Receivables Turnover ratio 360/15.31 23.51 days 360/17.04 21.13 days inventory Turnover Cost of goods sold/ average Inventory 758000/54500 13.91 Times 847000/84500 10.02 Times Fixed Asset turnover Net Sales / net Fixed assets 1252000/367800 3.40 Times 1290000/290100 4.45 Times Total Assets turnover Net Sales / Net assets 1252000/625400 2.00 Times 1290000/498400 2.59 Times Current ratio Currnet Assets / Current Liabilities 257600/122000 2.11 Times 208300/83200 2.50 Times Quick ratio Quick Assets /Quick Liabiliites 203100/122000 1.66 Times 123800/83200 1.49 Times Debt to Total Asstes Total Debt / Total Assets   *100 204400/625400 32.68% 296200/498400 59.43% times of interest earned EBIT/ Interest Expenses 131100/8200 15.99 Times 140000/29100 4.81 Times

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