Sharp Uniforms designs, manufactures, and implements corporate identity uniform
ID: 2596093 • Letter: S
Question
Sharp Uniforms designs, manufactures, and implements corporate identity uniform programs hat it rents or sells to customers throughout the United States and Canada Selected nformaton from the company's balance sheet follows SHARP in millions) Year Select Income Statement Information Net revenue Cost of goods sold Selling general, and administrative expenses Interest expense Income tax expense Net income Select Statement of Cash Flows Information Cash paid for interest Cash flows from operating activities Select Balance Sheet Information Cash and equivalents Marketable secunities Accounts receivable S 4,562 4,326 2,539 1,308 1,232 238 199 330 74 70 633 568 372 520 523 518 261 255 Prepaid expense and other current assets Accounts payable Current accrued expenses Current portion of long-term debt Other current liabilities Long-term debt 175 402 6 112 1,325 126 362 18 90 1,311 Required: Compute the following ratios: (Round your answers to 2 decimal places.) Receivable turnover ratio inventory turnover ratio Current ratio Cash ratio Times interest eamed ratio Cash coverage ratioExplanation / Answer
Receivable turnover ratio = Net credit sales/Average accounts receivable
Avergae accounts receivable = (518+520)/2 = 519
Receivable turnover ratio = 4562/519 = 8.79 times
Inventory turnover ratio = cost of goods sold/Average inventory
Average inventory = (261+255)/2 = 258
Inventory turnover ratio = 2652/258 = 10.3 times
Current Ratio = Current assets/Current liabilities
Current assets = 523+518+261+36 = 1338
Current liabilities = 175+402+6+112 = 695
Current Ratio = 1338/695 = 1.925
Cash ratio = (Cash + Cash equivalents)/Current liabilities
Cash ratio = 523/695 = 0.75
Times interest earned ratio = Earnings before interest and tax/Interest expense
Times interest earned ratio = (384-238-82)/82 = 64/82 = 0.78 times
Cash coverage ratio = (Cash + Cash equivalents)/Current liabilities
Cash coverage ratio = 523/695 = 0.75
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