ment The condensed financial statements of Sunland Company for the years 20: SUN

Question

ment The condensed financial statements of Sunland Company for the years 20: SUNLAND COMPANY Balance Sheets December 31 (in thousands) 2017 2016 Current assets $330 $360 570 500 600 530 130 160 1,630 1,550 410 380 110 110 510 $2,680 $2,550 $920 $890 620 520 1,140 1,140 Total liabilities and stockholders' equity $2,680 $2,550 Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses Total current assets Property, plant, and equipment (net) Investments Intangibles and other assets 530 Total assets Current liabilities Long-term liabilities Stockholders' equity -common SUNLAND COMPANY Income Statements For the Year Ended December 31 (in thousands) 2017 2016 Privacy.Policy I 02000-2018-Johny?leyasons.inc. All Rights Reserved. A Division of lohnw

Explanation / Answer

Answer b.

2017:

Average Inventory = ($600 + $530) / 2
Average Inventory = $565

Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $1,070 / $565
Inventory Turnover = 1.894

2016:

Average Inventory = ($530 + $450) / 2
Average Inventory = $490

Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $990 / $490
Inventory Turnover = 2.020

Answer c.

2017:

Profit Margin = Net Income / Sales Revenue
Profit Margin = $276 / $3,940
Profit Margin = 7.00%

2016:

Profit Margin = Net Income / Sales Revenue
Profit Margin = $156 / $3,600
Profit Margin = 4.33%

Answer d.

2017:

Average Assets = ($2,680 + $2,550) / 2
Average Assets = $2,615

Return on Assets = Net Income / Average Assets
Return on Assets = $276 / $2,615
Return on Assets = 10.55%

2016:

Average Assets = ($2,550 + $2,350) / 2
Average Assets = $2,450

Return on Assets = Net Income / Average Assets
Return on Assets = $156 / $2,450
Return on Assets = 6.37%

Answer e.

2017:

Average Common Stockholders’ Equity = ($1,140 + $1,140) / 2
Average Common Stockholders’ Equity = $1,140

Return on Common Stockholders’ Equity = Net Income / Average Common Stockholders’ Equity
Return on Common Stockholders’ Equity = $276 / $1,140
Return on Common Stockholders’ Equity = 24.21%

2016:

Average Common Stockholders’ Equity = ($1,140 + $930) / 2
Average Common Stockholders’ Equity = $1,035

Return on Common Stockholders’ Equity = Net Income / Average Common Stockholders’ Equity
Return on Common Stockholders’ Equity = $156 / $1,035
Return on Common Stockholders’ Equity = 15.07%

Answer f.

2017:

Debt to assets Ratio = (Current Liabilities + Long-term Liabilities) / Total Assets
Debt to assets Ratio = ($920 + $620) / $2,680
Debt to assets Ratio = 0.5746

2016:

Debt to assets Ratio = (Current Liabilities + Long-term Liabilities) / Total Assets
Debt to assets Ratio = ($890 + $520) / $2,550
Debt to assets Ratio = 0.5529

Answer g.

2017:

Times Interest Earned = (Sales Revenue - Cost of Goods Sold - Selling & administrative expenses) / Interest Expense
Times Interest Earned = ($3,940 - $1,070 - $2,400) / $10
Times Interest Earned = 47

2016:

Times Interest Earned = (Sales Revenue - Cost of Goods Sold - Selling & administrative expenses) / Interest Expense
Times Interest Earned = ($3,600 - $990 - $2,330) / $20
Times Interest Earned = 14

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