Profitability, Liquidity, and Solvency Ratios O\'Neill Corporation gathered the

Question

Profitability, Liquidity, and Solvency Ratios O'Neill Corporation gathered the following information from its 2016 financial statements: Net Sales Net Income Cash provided by Operating Activities Expenditures on Property, Plant and Equipment Current Assets Current Liabilities Total Assets Total Liabilities $280,000 0,000 100,000 17,000 50,000 25,000 140,000 99,500 Using the above data, calculate the following (1) return on sales ratio, (2) current ratio. (3) debt-to-total-assets ratio, and (4) free cash flow. (Round return on sales and debt-to-total assets ratios to one decimal point and round current ratio to two decimal points.) Returm on Sales Ratio 0 96 Current Ratio Debt to Total Assets Ratio 0% Free Cash Flow Check

Explanation / Answer

Working:

Return on Sales Ratio = Net income/Net sales = $80000/$280000 = 28.6%

Current Ratio = Current assets/Current liabilities = $50000/$25000 = 2.00

Debt-to Total Assets Ratio = Total liabilities/Total assets = $99500/$140000 = 71.1%

Free Cash Flow = Cash provided by operating activities - Capital expenditures = $100000 - $17000 = $83000

Return on Sales Ratio 28.6% Current Ratio 2.00 Debt-to Total Assets Ratio 71.1% Free Cash Flow $       83,000

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