Some recent financial statements for Smolira Golf Corp. follow. SMOLIRA GOLF COR
ID: 2732659 • Letter: S
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Some recent financial statements for Smolira Golf Corp. follow.
SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets Liabilities and Owners' Equity 2014 Assets 2014 2015 2015 Current assets Current liabilities Cash Accounts receivable Inventory $ 23,056 13,548 26,982 $ 25,200 16,300 28,200 Accounts pavable Notes payable Other $ 24,284 13,000 12,671 $ 28,200 11,900 19,900 Total $63,586 $ 69,700 Total $ 49,955 $ 60,000 $80,000 $ 92,000 Long-term debt Owners' equity Common stock and paid-in surplus Accumulated retained earnings 60,000 209,326 $ 60,000 222,000 Fixed assets Net plant and equipment $335,695 $364,300 Total $269,326 $282,000 Total assets $399,281 $434,000 Total liabilities and owners equity $399,281 $434,000 SMOLIRA GOLF CORP 2015 Income Statement Sales Cost of goods sold Depreciation $375,123 258,000 45,600 Earnings before interest and taxes Interest paid 71,523 15,400 Taxable income Taxes (40%) $ 56,123 22,449 Net income $ 33,674 Dividends Retained earnings $ 21,000 12,674Explanation / Answer
2014 2015 Short term solvency ratio: a. Current Ratio 1.27 times 1.16 times b. Quick ratio 0.73 times 0.69 times c.Cash ratio 0.46 times 0.42 times Asset utilization ratio: d.Total asset turnover ratio 0.86 times e.Inventory turnover 9.35 times f.Receivable turnover 25.14 times Long term solvency ratio g. Total debt ratio 0.33 times 0.35 times h.debt-equity ratio 0.48 times 0.54 times i.Equity multiplier 1.48 times 1.54 times j.Times interest earned 4.64 times k.Cash coverage ratio 7.61 times Profitability ratio: l.Profit margin 31.22% m.Return on assets 7.76% n. Return on equity 11.94% Working: 2014 2015 a. Current Ratio = Current Assets/Current liabilities = 63586/49955 69700/60000 = 1.27 1.16 b. Quick ratio = (Cash+Accouts receivable)/Current Liabilities = (23056+13548)/49955 (25200+16300)/60000 = 0.73 0.69 c.Cash ratio = Cash/Current liabilties = 23056/49955 25200/60000 = 0.46 0.42 d.Total asset turnover ratio = Sales/Total assets = 375123/434000 = 0.86 e.Inventory turnover = cost of goods sold/Average Inventory = 258000/{(26982+28200)/2} = 9.35 f.Receivable turnover = Sales/Average receivable = 375123/{(13548+16300)/2} = 25.14 g. Total debt ratio = Total liabilities/Total assets = (49955+80000)/399281 (60000+92000)/434000 = 0.33 0.35 h.debt-equity ratio = Total liabilities/Total Equity = (49955+80000)/269326 (60000+92000)/282000 = 0.48 0.54 i.Equity multiplier = Total Assets/Total stockholder's Equity = 399281/269326 434000/282000 = 1.48 1.54 j.Times interest earned = Earning before interest and taxes/Interests = 71523/15400 = 4.64 k.Cash coverage ratio = (Earning before interest and taxes+Non cash expenses)/Interest expenses = (71523+45600)/15400 = 7.61 l.Profit margin = Gross Profit/Total revenue = (375123-258000)/375123 = 0.31 m.Return on assets = Net income/Total assets = 33674/434000 = 0.08 n. Return on equity = Net Income/Total stockholder's Equity = 33674/282000 = 0.12
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