The following financial statements apply to Robin Company. 2015 2014 Revenues Ne

ID: 2487330 • Letter: T

Question

The following financial statements apply to Robin Company. 2015 2014 Revenues Net sales $ 211,300 $ 176,200 Other revenues 9,700 6,700 Total revenues 221,000 182,900 Expenses Cost of goods sold 124,100 102,000 Selling expenses 19,900 17,900 General and administrative expenses 10,200 9,200 Interest expense 2,300 2,300 Income tax expense 20,400 16,000 Total expenses 176,900 147,400 Earnings from continuing operations before extraordinary items 44,100 35,500 Extraordinary gain (net of $2,300 tax) 2,200 0 Net income $ 46,300 $ 35,500 Assets Current assets Cash $ 5,500 $ 7,500 Marketable securities 2,500 2,500 Accounts receivable 36,400 31,900 Inventories 100,800 94,600 Prepaid expenses 4,200 3,200 Total current assets 149,400 139,700 Plant and equipment (net) 105,700 105,700 Intangibles 21,600 0 Total assets $ 276,700 $ 245,400 Liabilities and Stockholders’ Equity Liabilities Current liabilities Accounts payable $ 39,600 $ 55,400 Other 16,400 16,400 Total current liabilities 56,000 71,800 Bonds payable 65,300 66,300 Total liabilities 121,300 138,100 Stockholders’ equity Common stock (43,000 shares) 113,300 113,300 Retained earnings 42,100 (6,000 ) Total stockholders’ equity 155,400 107,300 Total liabilities and stockholders’ equity $ 276,700 $ 245,400 Required Calculate the following ratios for 2014 and 2015. When data limitations prohibit computing averages, use year-end balances in your calculations.

. i. Current ratio. (Round your answers to 2 decimal places.)

j. Quick (acid-test) ratio. (Round your answers to 2 decimal places.)

k. Accounts receivable turnover. (Since 2013 numbers are not presented do not use averages when calculating the ratios for 2014. Instead, use the number presented on the 2014 balance sheet. Round your answers to 2 decimal places.)

l. Inventory turnover. (Since 2013 numbers are not presented do not use averages when calculating the ratios for 2014. Instead, use the number presented on the 2014 balance sheet. Round your answers to 2 decimal places.)

m. Debt to equity ratio. (Round your answers to 2 decimal places.)

n. Debt to assets ratio. (Round final answers to the nearest whole percent.)

Explanation / Answer

Current assets = current assets/ current liabilities

2015 =149,400/ 56,000

=2.67

2014 = 139,700/71,800

=1.95

Acid test ratio = Cash + marketable securities + account receivable/ current liabilities

2015 =44,400/56,000

=.79

2014 = 41,900/71,800

=.58

Account receivable turnover = net sales / average receivables

2015 =211,300/34,150

= 6.19

2014 = 176,200/31,900

=5.52

Inventory turnover = cost of goods sold / average inventory

2015 = 124,100/97,700

=1.27

2014 = 102,000/94,600

=1.08

Debt to Equity ratio = total liabilities / stockholder’s Equity

2015 = 276,700/155,400

=1.78

2014 = 245,400/107,300

=2.29

Debt to assets ratio = total liabilities / total assets

2015 = 121,300/276,700

= .44

2016 = 138,100/245,400

= .56