Question

SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets
Assets									Liabilities and Owners’ Equity
	2014				2015					2014				2015
Current assets									Current liabilities
Cash	$	23,056			$	25,200			Accounts payable	$	24,284			$	28,200
Accounts receivable		13,548				16,300			Notes payable		13,000				11,900
Inventory		26,982				28,200			Other		12,671				19,900
Total	$	63,586			$	69,700			Total	$	49,955			$	60,000
									Long-term debt	$	80,000			$	92,000
									Owners’ equity
									Common stock and paid-in surplus	$	60,000			$	60,000
									Accumulated retained earnings		209,326				222,000
Fixed assets
Net plant and equipment	$	335,695			$	364,300			Total	$	269,326			$	282,000
Total assets	$	399,281			$	434,000			Total liabilities and owners’ equity	$	399,281			$	434,000

SMOLIRA GOLF CORP. 2015 Income Statement
Sales					$	375,123
Cost of goods sold						258,000
Depreciation						45,600
Earnings before interest and taxes					$	71,523
Interest paid						15,400
Taxable income					$	56,123
Taxes (40%)						22,449
Net income					$	33,674
Dividends	$	21,000
Retained earnings		12,674

   

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.)

  

  

  

Long-term solvency ratios:		2014	2015
g.	Total debt ratio	times	times
h.	Debt–equity ratio	times	times
i.	Equity multiplier	times	times

  

j.	Times interest earned	times
k.	Cash coverage ratio	times

  

Profitability ratios:
I.	Profit margin	%
m.	Return on assets	%
n.	Return on equity	%

Answer 1