Question

Using the financial statements for the Snider Corporation, calculate the 13 basic ratios found in the chapter.   
   

SNIDER CORPORATION Balance Sheet December 31, 20X1
Assets
Current assets:
Cash		$	58,700
Marketable securities			23,200
Accounts receivable (net)			230,000
Inventory			247,000
Total current assets		$	558,900
Investments			64,100
Plant and equipment.	$695,000
Less: Accumulated depreciation	216,000
Net plant and equipment			479,000
Total assets		$	1,102,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	96,900
Notes payable			75,700
Accrued taxes			16,400
Total current liabilities		$	189,000
Long-term liabilities:
Bonds payable			158,700
Total liabilities		$	347,700
Stockholders' equity
Preferred stock, $50 par value		$	100,000
Common stock, $1 par value			80,000
Capital paid in excess of par			190,000
Retained earnings			384,300
Total stockholders' equity		$	754,300
Total liabilities and stockholders' equity		$	1,102,000

    

SNIDER CORPORATION Income Statement For the Year Ending December 31, 20X1
Sales (on credit)	$	2,024,000
Cost of goods sold		1,354,000
Gross profit	$	670,000
Selling and administrative expenses		511,000	*
Operating profit (EBIT)	$	159,000
Interest expense		31,600
Earnings before taxes (EBT)	$	127,400
Taxes		89,400
Earnings after taxes (EAT)	$	38,000

*Includes $40,800 in lease payments.

Using the above financial statements for the Snider Corporation, calculate the following ratios.

a. Profitability ratios. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
  

b. Assets utilization ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
   

c. Liquidity ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
  

  
d. Debt utilization ratios. (Do not round intermediate calculations. Input your debt to total assets answer as a percent rounded to 2 decimal places. Round your other answers to 2 decimal places.)
  

Answer 1

		Calculation	Ratio
a)	PROFITABILITY RATIOS:
	Profit margin	=38000/2024000 =	1.88%
	Return on assets (investment)	=38000/1102000 =	3.45%
	Return on equity	=38000/754300 =	5.04%
b)	ASSET UTILIZATION RATIOS:
	Receivable turnover	=2024000/230000 =	8.80	times
	Average collection period	=365/8.8 =	41.48	days
	Inventory turnover	=1354000/247000 =	5.48	times
	Fixed asset turnover	=2024000/479000 =	4.23	times
	Total asset turnover	=2024000/1102000 =	1.84	times
c)	LIQUIDITY RATIOS;
	Current ratio	=558900/189000 =	2.96	times
	Quick ratio	=(58700+23200+230000)/189000 =	1.65	times
d)	DEBT UTILIZATION RATIOS:
	Debt to total assets	=347700/1102000 =	0.32	times
	Times interest earned	=159000/31600 =	5.03	times
	Fixed charge coverage ratio	=(159000+40800)/(31600+40800) =	2.76	times