Question

Calculate the following ratios and provide an analysis of the company based on the ratios from the financial statements provided.

Days Sales Outstanding - answer

Profit Margin - answer

Asset Turnover - answer

Return on Assets - answer

Financial Leverage - answer

Return on Equity - answer

PPE Turnover - answer

Total Liabilities to Equity - answer

Times Interest Earned - answer

SILVER CLOUD COMPUTING
Income Statements
For the Years Ended February 28, 2018 and 2017
		fye 2/28/2018		fye 2/28/2017
		(in thousands)		(in thousands)
Sales		$            225,000		$            200,000
Sales Discounts		3,375		2,500
Net Sales		221,625		197,500
Wages and Salaries		73,500		70,000
Bad Debt Expense		2,100		2,000
Depreciation		20,000		20,000
Marketing Expense		33,750		30,000
Occupancy Expense		54,000		54,000
Research & Development		22,500		20,000
Total Expenses		205,850		196,000
Income from Operations		15,775		1,500
Interest Expense		1,200		1,200
Income Before Taxes		14,575		300
Income Taxes (40%)		5,830		120
Net Income		$                8,745		$                    180

SILVER CLOUD COMPUTING
Balance Sheets
February 28, 2018 and 2017 and February 29, 2016
							At Inception
			Feb 28 2018		Feb 28 2017		Feb 29 2016
			(in thousands)		(in thousands)		(in thousands)
Cash			$              55,755		$       22,300.00		$        10,000
Accounts Receivable			18,000		16,000		-
Net Computer Equipment			20,000		40,000		60,000
Total Assets			$              93,755		$             78,300		$        70,000
Accounts Payable			$                9,000		$               8,000		$                  -
Taxes Payable			5,830		120		-
Long-term Debt			30,000		30,000		30,000
Common Stock			40,000		40,000		40,000
Retained Earnings			8,925		180		-
Total Liabilities & Stockholders Equity			$              93,755		$             78,300		$        70,000

Answer 1

Computation of Days Sales Outstanding
Detail	2018	2017
Account Receivable	$18,000.00	$16,000.00
Sales	$221,625.00	$197,500.00
Days Sales Outstanding	29.64	29.57
Account Receivable/ (sales/365 Days)
Computation of Times Interest Earned Ratio
Detail	2018	2017
EBITA
Income From operation	$15,775	1500
Interest Expense	$1,200	1200
Total	$16,975	$2,700
Interest Expense	$1,200	$1,200
Times Interest Earned Ratio	7%	44%
( Interest Expense/ EBIT)
Computation of Asset Turnover
Detail	2018	2017
Sales	$221,625.00	$197,500.00
Fixed Asset	$20,000.00	$40,000.00
Sales/ Fixed Asset	11.08	4.94
Computation of Fixed Asset to Long term liabilities
Detail	2018	2017
Fixed Asset	$20,000.00	$40,000.00
Long term Liabilities	$30,000.00	$30,000.00
Fixed Asset/Lomng term Liabilities	67%	133%
Computation of Liability to Equity
Detail	2018	2017
Liability	$44,830.00	$38,120.00
Equity	$48,925.00	$40,180.00
Liability /Equity	92%	95%
Computation of Return on Total Asset
Detail	2018	2017
Net Income	$8,745.00	$180.00
Total Asset	$93,755.00	$78,300.00
Net Income / Total Asset	9%	0%
Computation of Return on Stockholder Equity
Detail	2018	2017
Net Income	$8,745.00	$180.00
Stockholder's Equity	$48,925.00	$40,180.00
Net Income / Common Equity	18%	0.45%
Computation of Profit Margin
Detail	2018	2017
Net Income	$8,745.00	$180.00
Sales	$221,625.00	$197,500.00
Net Income / Sales	4%	0.09%
Computation of Financial Leverage
Detail	2018	2017
EBIT	$15,775.00	$1,500.00
EBT	$14,575.00	$300.00
EBIT/EBT	1.08	5.00