BUSI 320 Comprehensive Problem 1 Spring 2019
Use the following information to answer the questions on page 2 below:
Note: all sales are credit sales.
Income Stmt info:
2017
2018
Sales
$ 1,000,000
$ 1,100,000
less Cost of Goods Sold:
400,000
424,000
Gross Profit
600,000
676,000
Operating Expenses
350,000
365,750
Earnings before Interest & Taxes
250,000
310,250
Interest exp
25,000
25,500
earnings before Taxes
225,000
284,750
Taxes
90,000
113,900
Net Income
$ 135,000
$ 170,850
Balance Sheet info:
12/31/2017
12/31/2018
Cash
25,000
$ 30,000
Accounts Receivable
50,000
$ 51,000
Inventory
125,000
$ 131,250
Total Current Assets
$ 200,000
$ 212,250
Fixed Assets (Net)
$ 300,000
$ 315,000
Total Assets
$ 500,000
$ 527,250
Current Liabilities
$ 110,000
$ 121,000
Long Term Liabilities
$ 180,000
$ 188,000
Total Liabilities
$ 290,000
$ 309,000
Stockholder's Equity
$ 210,000
$ 218,250
Total Liab & Equity:
$ 500,000
$ 527,250
Compute each of the following ratios for 2017 and 2018 and
indicate whether each ratio was getting "better" or "worse" from 2017 to 2018
and was "good" or "bad" compared to the Industry Avg in 2018
(round all numbers to 2 digits past the decimal place)
Profit Margin
Current Ratio
Quick Ratio
Return on Assets
Debt to Assets
Receivables turnover
Avg. collection period*
Inventory Turnover**
Return on Equity
Times Interest Earned
*Assume a 360 day year
**Inventory Turnover can be computed 2 different ways.
listed in the text
Use the formula
"Good" or
"Bad"
Getting
compared
Better or
2018
to
Getting
Indust
Industry
2017
2018
Worse?
ry Avg
Avg
Getting
0.14 0.16 Better
Getting
1.82 1.75 Worse
Getting
0.68 0.67 Worse
Getting
0.27 0.32 Better
Getting
0.58 0.59 Worse
Getting
20 21.57 Better
Getting
18 16.69 Better
Getting
8 8.38
Better
Getting
0.64 0.78 Better
Getting
10 12.17 Better
0.11
1.90
0.66
.28
.50
18.00
15.50
9.25
0.55
11.15
Good
Bad
Good
Good
Bad
Good
Bad
Bad
Good
Good
