Question

Some recent financial statements for Smolira Golf Corp. follow.

  

SMOLIRA GOLF CORP. 2017 and 2018 Balance Sheets
Assets									Liabilities and Owners’ Equity
	2017				2018					2017				2018
Current assets									Current liabilities
Cash	$	24,226			$	25,900			Accounts payable	$	24,984			$	28,900
Accounts receivable		14,248				17,000			Notes payable		17,000				12,600
Inventory		27,802				28,900			Other		13,371				17,500
Total	$	66,276			$	71,800			Total	$	55,355			$	59,000
									Long-term debt	$	124,000			$	127,662
									Owners’ equity
									Common stock and paid-in surplus	$	60,000			$	60,000
									Accumulated retained earnings		169,616				189,338
Fixed assets
Net plant and equipment	$	342,695			$	364,200			Total	$	229,616			$	249,338
Total assets	$	408,971			$	436,000			Total liabilities and owners’ equity	$	408,971			$	436,000

SMOLIRA GOLF CORP. 2018 Income Statement
Sales					$	390,477
Cost of goods sold						261,500
Depreciation						50,900
Earnings before interest and taxes					$	78,077
Interest paid						16,100
Taxable income					$	61,977
Taxes (23%)						14,255
Net income					$	47,722
Dividends	$	28,000
Retained earnings		19,722

   

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.)

Find the follow for 2017 and 2018:

Current ratio

quick ratio

cash ratio

Find the follow:

Total asset turnover

Inventory turnover

receivables turnover

Find the following for 2017 and 2018:

total debt ratio

debt equity ratio

equity muliplier

Find the following:

time interest earned

cash coverage ratio

profit margin

return on assets

return on equity

Answer 1

Answer a.

2017:

Current ratio = Current assets / Current liabilities
Current ratio = $66,276 / $55,355
Current ratio = 1.20

2018:

Current ratio = Current assets / Current liabilities
Current ratio = $71,800 / $59,000
Current ratio = 1.22

Answer b.

2017:

Quick ratio = (Current assets - Inventory) / Current liabilities
Quick ratio = ($66,276 - $27,802) / $55,355
Quick ratio = 0.70

2018:

Quick ratio = (Current assets - Inventory) / Current liabilities
Quick ratio = ($71,800 - $28,900) / $59,000
Quick ratio = 0.73

Answer c.

2017:

Cash ratio = Cash / Current liabilities
Cash ratio = $24,226 / $55,355
Cash ratio = 0.44

2018:

Cash ratio = Cash / Current liabilities
Cash ratio = $25,900 / $59,000
Cash ratio = 0.44

Answer d.

Total asset turnover = Sales / Total assets
Total asset turnover = $390,477 / $436,000
Total asset turnover = 0.90

Answer e.

Inventory turnover = Cost of goods sold / Inventory
Inventory turnover = $261,500 / $28,900
Inventory turnover = 9.05

Answer f.

Receivables turnover = Sales / Accounts receivable
Receivables turnover = $390,477 / $17,000
Receivables turnover = 22.97