Some recent financial statements for Smolira Golf, Inc., follow SMOLIRA GOLF, IN

Question

Some recent financial statements for Smolira Golf, Inc., follow SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2015 and 2016 2015 2016 2015 2016 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash Accounts receivable Inventory $ 2,851 $2,707 5,661 13,662 S20,276 22,030 Accounts payable Notes payable Other $ 2,213 2,720 2,236 119 $ 4,125 5,075 $14,500 $ 17,260 4,707 12,718 1,810 102 Total Long-term debt Owners' equity Total Common stock and paid-in surplus Accumulated retained earnings $44,000 44,000 39,988 $59,714$83,988 $78,339 $106,323 Fixed assets 15,714 Net plant and equipment Total assets $58,063 $78,339 $84,293 $106,323 Total Total liabilities and owners' equity SMOLIRA GOLF, INC 2016 Income Statement Sales Cost of goods sold Depreciation EBIT Interest paid Taxable income Taxes Net income $189,770 127,403 5,213 $ 57,154 1,310 $55,844 19,545 $ 36,299 Dividends Retained earnings $12,025 24,274

Explanation / Answer

Answering the first 4 parts,

(a) Current Ratio is Current Assets / Current Liabilities

Hence for 2015, 20,276 /4,125 = 4.91 times

Hence for 2016, 22,030 / 5075 = 4.34 times,

( b) Quick ratio is given by the formula ( cash and cash equivalent + Accounts receivable) / Current Liabilities

Hence for 2015, (2851+4707)/4125 = 7558/4125 = 1.83 times

Hence for 2016, (2707+ 5661)/5075 = 8368/5075 =1.65 times

(c) Cash ratio is given by cash and cash equivalent / Current Liabilities

Hence for 2015, 2851/4125 = 0.69 times

Hence for 2016, 2707/5075 = 0.53 times

(d) Total asset turnover is Net Sales / Average Total Assets

Average Total Assets for the 2 years is (78,339 + 106,323)/2 = 92,331

= 189,770 / 92,331

= 2.06 times

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