BALANCE SHEET INCOME STATEMENT $\'000 $\'000 Net Fixed Assets 3,320 Net Sales (a

Question

BALANCE SHEET INCOME STATEMENT $'000 $'000 Net Fixed Assets 3,320 Net Sales (all credit) 12,680 Cost of Sales 8,930 Cash 400 3,750 Accounts Receivable 1300 Inventories ? Selling & Admin exps. 2,230 Interest Exp. 460 Total Assets 7,120 ? Accounts Payable 320 Profit before taxes ? Accruals 260 Taxes 390 Short Term Loans 1,100 ? Profit after taxes 670 Long Term Debt 2,000 Shareholders Equity ? Total Liabilities & Equity ? Questions: 1. Complete the Balance Sheet and Income Statements 2. Compute the current ratio 3.Compute the Acid Test Ratio 4. What is the average collection period ? 5.What is the inventory turnover ratio? 6. Compute the debt to equity ratio. 7.Compute the Long Term Debt to Total Capitalization ratio. 8. What is the gross profit margin? 9.What is the net profit margin? 10. Compute the Return on Equity.

Explanation / Answer

All Amounts in $ '000s 1. Income Statement Net Sales (All credit) 12680 Cost of Sales 8930 Gross Margin 3750 Selling and Admin Expenses 2230 Interest expenses 460 2690 Profit Before Taxes 1060 Taxes 390 Profit after Taxes 670 Balance Sheet Assets Current Assets Cash 400 Accounts Receivable 1300 Inventories 2100 Total Current Assets 3800 Net Fixed Assets 3320 Total Assets 7120 Liabilities and Equity Current Liabilities Accounts Payable 320 Short Term Loans 1100 Accruals 260 Total Current Liabilities 1680 Long Term Liabilities Long-Term Debt 2000 Total Liabilities 3680 Shareholders' Equity 3440 Total Liabilities and Shareholders' Equity 7120 2. Current Ratio = Current Assets / Current Liabilities = 3,800 / 1,680 = 2.26 : 1 3. Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities = (3,800 - 2,100) / 1,680 = 1.01 : 1 4. Average Collection Period = 365 / (Sales / Accounts Receivable) = 365 / (12,680 / 1,300) = 37.42 days 5. Inventory Turnover Ratio = Cost of Goods Sold / Inventory = 8,930 / 2,100 = 4.25 : 1 6. Debt to Equity Ratio = Total Debt / Total Equity = 3,680 / 3,440 = 1.07 : 1 7. Long Term Debt to Total Capitalisation Ratio = Long Term Debt / Total Assets = 2,000 / 7,120 = 0.28 : 1 8. Gross Profit Margin = Gross Margin / Sales = 3,750 / 12,680 = 29.57% 9. Net Margin Ratio = Net Income after Taxes / Sales = 670 / 12,680 = 5.28% 10. Return on Equity = Net Income after Taxes / Total Equity = 670 / 3,440 = 19.48%

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