Question

Some recent financial statements for Smolira Golf, Inc., follow.

SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2015 and 2016
	2015				2016					2015				2016
Assets									Liabilities and Owners’ Equity
Current assets									Current liabilities
Cash	$	3,271			$	3,457			Accounts payable	$	2,138			$	2,570
Accounts receivable		4,782				5,811			Notes payable		1,735				2,086
Inventory		12,418				13,812			Other		87				104
Total	$	20,471			$	23,080			Total	$	3,960			$	4,760
									Long-term debt	$	13,700			$	16,460
									Owners’ equity
									Common stock and paid-in surplus	$	36,500			$	36,500
Fixed assets									Accumulated retained earnings		15,639				38,893
Net plant and equipment	$	49,328			$	73,533			Total	$	52,139			$	75,393
Total assets	$	69,799			$	96,613			Total liabilities and owners’ equity	$	69,799			$	96,613

SMOLIRA GOLF, INC. 2016 Income Statement
Sales				$	186,770
Cost of goods sold					125,903
Depreciation					5,363
EBIT				$	55,504
Interest paid					1,460
Taxable income				$	54,044
Taxes					18,915
Net income				$	35,129
Dividends	$	11,875
Retained earnings		23,254

Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate): (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Enter the profitability ratios as a percent.)

		2015			2016
Short-term solvency ratios
a.	Current ratio		times			times
b.	Quick ratio		times			times
c.	Cash ratio		times			times
Asset utilization ratios
d.	Total asset turnover					times
e.	Inventory turnover					times
f.	Receivables turnover					times
Long-term solvency ratios
g.	Total debt ratio		times			times
h.	Debt−equity ratio		times			times
i.	Equity multiplier		times			times
j.	Times interest earned ratio					times
k.	Cash coverage ratio					times
Profitability ratios
l.	Profit margin					%
m.	Return on assets					%
n.	Return on equity					%

Answer 1

Answer a.

2015:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $20,471 / $3,960
Current Ratio = 5.17 times

2016:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $23,080 / $4,760
Current Ratio = 4.85 times

Answer b.

2015:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio = ($20,471 - $12,418) / $3,960
Quick Ratio = 2.03 times

2016:

Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Quick Ratio = ($23,080 - $13,812) / $4,760
Quick Ratio = 1.95 times

Answer c.

2015:

Cash Ratio = Cash / Current Liabilities
Cash Ratio = $3,271 / $3,960
Cash Ratio = 0.83 times

2016:

Cash Ratio = Cash / Current Liabilities
Cash Ratio = $3,457 / $4,760
Cash Ratio = 0.73 times

Answer d.

Total Asset Turnover = Sales / Total Assets
Total Asset Turnover = $186,770 / $96,613
Total Asset Turnover = 1.93 times

Answer e.

Inventory Turnover = Cost of Goods Sold / Inventory
Inventory Turnover = $125,903 / $13,812
Inventory Turnover = 9.12 times

Answer f.

Receivables Turnover = Sales / Accounts Receivable
Receivables Turnover = $186,770 / $5,811
Receivables Turnover = 32.14 times