Question

Some recent financial statements for Smolira Golf Corp. follow.

  

SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets
Assets									Liabilities and Owners’ Equity
	2014				2015					2014				2015
Current assets									Current liabilities
Cash	$	23,046			$	25,100			Accounts payable	$	24,184			$	28,100
Accounts receivable		13,448				16,200			Notes payable		20,000				11,800
Inventory		26,822				28,100			Other		12,571				19,100
Total	$	63,316			$	69,400			Total	$	56,755			$	59,000
									Long-term debt	$	79,000			$	90,000
									Owners’ equity
									Common stock and paid-in surplus	$	48,000			$	48,000
									Accumulated retained earnings		214,256				237,000
Fixed assets
Net plant and equipment	$	334,695			$	364,600			Total	$	262,256			$	285,000
Total assets	$	398,011			$	434,000			Total liabilities and owners’ equity	$	398,011			$	434,000

SMOLIRA GOLF CORP. 2015 Income Statement
Sales					$	349,760
Cost of goods sold						241,500
Depreciation						27,200
Earnings before interest and taxes					$	81,060
Interest paid						15,300
Taxable income					$	65,760
Taxes (35%)						23,016
Net income					$	42,744
Dividends	$	20,000
Retained earnings		22,744

   

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.) Asset utilization ratios: e.  Inventory turnover times f.  Receivables turnover times 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

	2015
e) Inventory Turnover ratio	9.00
COGS/Ending Inventory	241500/26822
If avg is used	8.79
COGS/Avg Inventory	241500/((26822+28100)/2)
f) Receivable Turnover ratio	26.01
Sales/EndingAccounts receivable	349760/13448
If avg is used	23.59
	349760/(13448+16200)/2)
As said in the question to use year end figures rather avg figures so answers are accordingly
	2014.00	2015.00
g) Total debt ratio	0.34	0.34
Debt/Total assets	(56755+79000)/398011	(59000+90000)/434000
h) Debt equity ratio	0.52	0.52
	(56755+79000)/262256	(59000+90000)/285000
	2015.00
j) Times interest earned	5.30
EBIT/Interest expenses	81060/15300
k)
Cash covergae ratio	7.08
EBIT+Dep exp/Int exp	(81060+27200)/15300
l) profit margin	12.22
Net income/sales*100	42744/349760*100
m) Return on Assets	10.74
Net Income/Total assets*100	42744/398011*100
If avg is used	10.27
Net Income/AvgTotal assets*100	42744/((398011+434000)/2)*100
n) Return on Equity	16.30
Net Income/Equity*100	42744/262256*100
	15.62
Net Income/Equity*100	42744/((262256+285000)/2)*100