Question

The condensed financial statements of Murawski Company for the years 2019 and 2020 are presented follows. (Amounts in thousands.)

MURAWSKI COMPANY Balance Sheets December 31
		2020			2019
Current assets
Cash and cash equivalents		$ 346			$ 370
Accounts receivable (net)		406			442
Inventory		392			470
Prepaid expenses		150			146
Total current assets		1,294			1,428
Investments		12			12
Property, plant, and equipment		390			418
Intangibles and other assets		502			528
Total assets		$2,198			$2,386
Current liabilities		$ 770			$ 900
Long-term liabilities		360			416
Stockholders’ equity—common		1,068			1,070
Total liabilities and stockholders’ equity		$2,198			$2,386

MURAWSKI COMPANY Income Statements For the Years Ended December 31
		2020			2019
Sales revenue		$3,970			$3,800
Costs and expenses
Cost of goods sold		888			976
Selling & administrative expenses		2,350			2,414
Interest expense		24			18
Total costs and expenses		3,262			3,408
Income before income taxes		708			392
Income tax expense		178			89
Net income		$ 530			$ 303

Compute the following ratios for 2020 and 2019. (Round current ratio and invertory turnover ratio to 2 decimal places, e.g. 1.62 or 1.62% and all other answers to 1 decimal place, e.g. 1.6 or 1.6%.)

(a)		Current ratio.
(b)		Inventory turnover. (Inventory on 12/31/18 was $318.)
(c)		Profit margin ratio.
(d)		Return on assets. (Assets on 12/31/18 were $1,880.)
(e)		Return on common stockholders’ equity. (Stockholders' equity on 12/31/18 was $880.)
(f)		Debt to assets ratio.
(g)		Times interest earned.

				2020			2019
(a)		Current ratio			:1			:1
(b)		Inventory turnover			times			times
(c)		Profit margin ratio			%			%
(d)		Return on assets			%			%
(e)		Return on common stockholders’ equity			%			%
(f)		Debt to assets ratio			%			%
(g)		Times interest earned			times			times

Answer 1