Using the financial statements for the snider corporation

Corp Finance HW Assignment C1

Frantic Fast Foods had earnings after taxes of $1,200,000 in the year 2012 with 322,000 shares outstanding. On January 1, 2013, the firm issued 30,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 24 percent.

a.

Compute earnings per share for the year 2012. (Round your answer to 2 decimal places.)

Earnings per share

$

b.

Compute earnings per share for the year 2013. (Round your answer to 2 decimal places.)

Earnings per share

$

Hillary Swank Clothiers had sales of $406,000 and cost of goods sold of $306,000.

a.

What is the gross profit margin (ratio of gross profit to sales)? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Gross profit margin

%

b.

If the average firm in the clothing industry had a gross profit of 20 percent, how is the firm doing?

The firm is .

A-Rod Fishing Supplies had sales of $2,460,000 and cost of goods sold of $1,610,000. Selling and administrative expenses represented 12 percent of sales. Depreciation was 8 percent of the total assets of $4,730,000.

What was the firm’s operating profit?

Operating profit

$

Given the following information, prepare in good form an income statement for the Dental Drilling Company. (Input all amounts as positive values.)

Selling and administrative expense

$

108,000

Depreciation expense

73,000

Sales

551,000

Interest expense

48,000

Cost of goods sold

180,000

Taxes

53,000

Dental Drilling Company

Income Statement

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Given the following information, prepare in good form an income statement for Jonas Brothers Cough Drops. (Input all amounts as positive values.)

Selling and administrative expense

$

251,000

Depreciation expense

196,000

Sales

1,640,000

Interest expense

121,000

Cost of goods sold

549,000

Taxes

165,000

Jonas Brothers Cough Drops

Income Statement

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Stein Books Inc. sold 1,500 finance textbooks for $225 each to High Tuition University in 2013. These books cost $190 to produce. Stein Books spent $12,300 (selling expense) to convince the university to buy its books.

Depreciation expense for the year was $15,300. In addition, Stein Books borrowed $101,000 on January 1, 2013, on which the company paid 14 percent interest. Both the interest and principal of the loan were paid on December 31, 2013. The publishing firm’s tax rate is 30 percent.

Prepare an income statement for Stein Books. (Input all amounts as positive values.)

Stein Books Inc.

Income Statement

For the Year Ending December 31, 2013

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Arrange the following items in proper balance sheet presentation: (Be sure to list the assets and liabilities in order of their liquidity. Input all amounts as positive values.)

Accumulated depreciation

$

334,000

Retained earnings

50,000

Cash

19,000

Bonds payable

230,000

Accounts receivable

57,000

Plant and equipment—original cost

750,000

Accounts payable

40,000

Allowance for bad debts

12,000

Common stock, $1 par, 100,000 shares outstanding

100,000

Inventory

73,000

Preferred stock, $55 par, 1,000 shares outstanding

55,000

Marketable securities

24,000

Investments

23,000

Notes payable

36,000

Capital paid in excess of par (common stock)

89,000

Balance Sheet

Assets

Liabilities and Stockholders’ Equity

Current Assets:

Current Liabilities:

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Total current liabilities

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Long-term liabilities

Net accounts receivable

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Total current assets

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Total liabilities

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Other Assets:

Stockholders’ Equity:

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$ incorrect

Fixed assets:

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Net plant and equipment

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Total stockholders’ equity

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Total assets

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Total liabilities and stockholders’ equity

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Elite Trailer Parks has an operating profit of $264,000. Interest expense for the year was $30,500; preferred dividends paid were $29,100; and common dividends paid were $37,900. The tax was $65,400. The firm has 25,400 shares of common stock outstanding.

a.

Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.)

Earnings per share

$

Common dividends per share

$

b.

What was the increase in retained earnings for the year?

Increase in retained earnings

$

Quantum Technology had $652,000 of retained earnings on December 31, 2013. The company paid common dividends of $31,700 in 2013 and had retained earnings of $549,000 on December 31, 2012.

a.

How much did Quantum Technology earn during 2013?

Earnings available to common stockholders

$

b.

What would earnings per share be if 42,100 shares of common stock were outstanding? (Round your answer to 2 decimal places.)

Earnings per share

$

Botox Facial Care had earnings after taxes of $282,000 in 2012 with 200,000 shares of stock outstanding. The stock price was $48.80. In 2013, earnings after taxes increased to $386,000 with the same 200,000 shares outstanding. The stock price was $59.00.

a.

Compute earnings per share and the P/E ratio for 2012. (The P/E ratio equals the stock price divided by earnings per share.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Earnings per share

$

P/E ratio

times

b.

Compute earnings per share and the P/E ratio for 2013. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Earnings per share

$

P/E ratio

times

c.

Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.)

The stock price n/r incorrect by n/r incorrect percent while EPS n/r incorrect by n/r incorrect percent.

The Rogers Corporation has a gross profit of $760,000 and $306,000 in depreciation expense. The Evans Corporation also has $760,000 in gross profit, with $42,000 in depreciation expense. Selling and administrative expense is $230,000 for each company.

a.

Given that the tax rate is 40 percent, compute the cash flow for both companies.

Rogers

Evans

Cash flow

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b.

Calculate the difference in cash flow between the two firms.

Difference in cash flow

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rev: 02_20_2014_QC_44768

Nova Electrics anticipated cash flow from operating activities of $16 million in 2011. It will need to spend $8.5 million on capital investments in order to remain competitive within the industry. Common stock dividends are projected at $.65 million and preferred stock dividends at $.20 million.

a.

What is the firm’s projected free cash flow for the year 2011? (Enter your answer in millions of dollars rounded to 2 decimal places.)

Free cash flow

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b.

What does the concept of free cash flow represent?

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The Holtzman Corporation has assets of $397,000, current liabilities of $87,000, and long-term liabilities of $72,000. There is $36,500 in preferred stock outstanding; 20,000 shares of common stock have been issued.

a.

Compute book value (net worth) per share. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Book value per share

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b.

If there is $25,900 in earnings available to common stockholders, and Holtzman’s stock has a P/E of 16 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Current price

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c.

What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Market value to book value

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Amigo Software Inc. has total assets of $820,000, current liabilities of $181,000, and long-term liabilities of $210,000. There is $90,000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued.

a.

Compute book value (net worth) per share. (Round your answer to 2 decimal places.)

Book value per share

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b.

If there is $52,800 in earnings available to common stockholders and the firm’s stock has a P/E of 26 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round you final answer to 2 decimal places.)

Current price

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c.

What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round you final answer to 2 decimal places.)

Market value to book value

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For December 31, 2012, the balance sheet of Baxter Corporation was as follows:

Current Assets

Liabilities

Cash

$

28,000

Accounts payable

$

30,000

Accounts receivable

33,000

Notes payable

38,000

Inventory

43,000

Bonds payable

68,000

Prepaid expenses

13,800

Fixed Assets

Stockholders’ Equity

Gross plant and equipment

$

268,000

Preferred stock

$

38,000

Less: Accumulated depreciation

53,600

Common stock

73,000

Paid-in capital

43,000

Net plant and equipment

214,400

Retained earnings

42,200

Total assets

$

332,200

Total liabilities and stockholders’ equity

$

332,200

Sales for 2013 were $310,000, and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $31,000. Depreciation expense was 11 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 9 percent, while the interest rate on the bonds payable was 15 percent. This interest expense is based on December 31, 2012 balances. The tax rate averaged 35 percent.

$3,800 in preferred stock dividends were paid and $6,150 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding.

During 2013, the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 9 percent. A new machine was purchased on December 31, 2013, at a cost of $53,000.

Accounts payable increased by 30 percent. Notes payable increased by $7,800 and bonds payable decreased by $19,000, both at the end of the year. The preferred stock, common stock, and capital paid in excess of par accounts did not change.

a.

Prepare an income statement for 2013. (Round EPS answer to 2 decimal places. Input all amounts as positive values.)

BAXTER CORPORATION 2013 Income Statement

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Earnings available to common stockholders

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Shares outstanding

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Earnings per share

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b.

Prepare a statement of retained earnings for 2013. (Input all amounts as positive values.)

BAXTER CORPORATION 2013 Income Statement

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Less: n/r incorrect

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c.

Prepare a balance sheet as of December 31, 2013. (Be sure to list the assets and liabilities in order of their liquidity. Input all amounts as positive values.)

BAXTER CORPORATION 2013 Balance Sheet

Current Assets

Liabilities

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Total current assets

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Total liabilities

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Fixed Assets

Stockholders' Equity

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Net plant and equipment

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Total stockholders' equity

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Total assets

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Total liabilities and stockholders' equity

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Refer to the following financial statements for Crosby Corporation:

CROSBY CORPORATION Income Statement For the Year Ended December 31, 2011

Sales

$

3,650,000

Cost of goods sold

2,230,000

Gross profit

$

1,420,000

Selling and administrative expense

654,000

Depreciation expense

273,000

Operating income

$

493,000

Interest expense

85,300

Earnings before taxes

$

407,700

Taxes

186,000

Earnings after taxes

$

221,700

Preferred stock dividends

10,000

Earnings available to common stockholders

$

211,700

Shares outstanding

150,000

Earnings per share

$

1.41

Statement of Retained Earnings For the Year Ended December 31, 2011

Retained earnings, balance, January 1, 2011

$

1,370,100

Add: Earnings available to common stockholders, 2011

211,700

Deduct: Cash dividends declared and paid in 2011

141,000

Retained earnings, balance, December 31, 2011

$

1,440,800

Comparative Balance Sheets For 2010 and 2011

Year-End 2010

Year-End 2011

Assets

Current assets:

Cash

$

137,000

$

107,100

Accounts receivable (net)

541,000

571,000

Inventory

697,000

717,000

Prepaid expenses

65,600

32,800

Total current assets

$

1,440,600

$

1,427,900

Investments (long-term securities)

95,800

89,000

Gross plant and equipment

$

2,770,000

$

3,420,000

Less: Accumulated depreciation

1,220,000

1,493,000

Net plant and equipment

1,550,000

1,927,000

Total assets

$

3,086,400

$

3,443,900

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

369,000

$

616,000

Notes payable

501,000

501,000

Accrued expenses

73,300

51,100

Total current liabilities

$

943,300

$

1,168,100

Long-term liabilities:

Bonds payable, 2011

183,000

245,000

Total liabilities

$

1,126,300

$

1,413,100

Stockholders’ equity:

Preferred stock, $100 par value

$

90,000

$

90,000

Common stock, $1 par value

150,000

150,000

Capital paid in excess of par

350,000

350,000

Retained earnings

1,370,100

1,440,800

Total stockholders’ equity

$

1,960,100

$

2,030,800

Total liabilities and stockholders’ equity

$

3,086,400

$

3,443,900

a.

Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with a minus sign.)

CROSBY CORPORATION Statement of Cash Flows For the Year Ended December 31, 2011

Cash flows from operating activities:

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Adjustments to determine cash flow from operating activities:

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Total adjustments

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Net cash flows from operating activities

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Cash flows from investing activities:

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incorrect

Net cash flows from investing activities

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Cash flows from financing activities:

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incorrect

Net cash flows from financing activities

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Net increase (decrease) in cash flows

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b.

Compute the book value per common share for both 2010 and 2011 for the Crosby Corporation.(Round your answers to 2 decimals places.)

Book value

2010

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2011

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c.

If the market value of a share of common stock is 1.7 times book value for 2011, what is the firm’s P/E ratio for 2011? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

P/E ratio

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Gates Appliances has a return-on-assets (investment) ratio of 8 percent.

a.

If the debt-to-total-assets ratio is 40 percent, what is the return on equity? (Input your answer as a percent rounded to 2 decimal places.)

Return on equity

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b.

If the firm had no debt, what would the return-on-equity ratio be? (Input your answer as a percent rounded to 2 decimal places.)

Return on equity

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Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation.

a.

Butters Corporation has a profit margin of 6.5 percent and its return on assets (investment) is 16.25 percent. What is its assets turnover? (Round your answer to 2 decimal places.)

Assets turnover ratio

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times

b.

If the Butters Corporation has a debt-to-total-assets ratio of 70.00 percent, what would the firm’s return on equity be? (Input your answer as a percent rounded to 2 decimal places.)

Return on equity

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c.

What would happen to return on equity if the debt-to-total-assets ratio decreased to 60.00 percent?(Input your answer as a percent rounded to 2 decimal places.)

Return on equity

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Jerry Rice and Grain Stores has $4,270,000 in yearly sales. The firm earns 4 percent on each dollar of sales and turns over its assets 3 times per year. It has $102,000 in current liabilities and $396,000 in long-term liabilities.

a.

What is its return on stockholders’ equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Return on stockholders' equity

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b.

If the asset base remains the same as computed in part a, but total asset turnover goes up to 3.60, what will be the new return on stockholders’ equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

New return on stockholders' equity

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Assume the following data for Cable Corporation and Multi-Media Inc.

Cable Corporation

Multi-Media Inc.

Net income

$

39,900

$

112,000

Sales

310,000

2,550,000

Total assets

480,000

937,000

Total debt

187,000

538,000

Stockholders' equity

293,000

399,000

a-1.

Compute return on stockholders’ equity for both firms. (Input your answers as a percent rounded to 2 decimal places.)

Return on Stockholders’ Equity

Cable Corporation

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Multi-Media, Inc.

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a-2.

Which firm has the higher return?

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b.

Compute the following additional ratios for both firms. (Input your Net income/Sales, Net income/Total assets and Debt/Total asset answers as a percent rounded to 2 decimal places. Round your Sales/Total assets answers to 2 decimal places.)

Cable Corporation

Multi-Media Inc.

Net income/Sales

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Net income/Total assets

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Sales/Total assets

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Debt/Total assets

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The balance sheet for Stud Clothiers is shown next. Sales for the year were $3,510,000, with 75 percent of sales sold on credit.

STUD CLOTHIERS Balance Sheet 20XX

Assets

Liabilities and Equity

Cash

$

39,000

Accounts payable

$

297,000

Accounts receivable

304,000

Accrued taxes

128,000

Inventory

294,000

Bonds payable (long-term)

122,000

Plant and equipment

488,000

Common stock

100,000

Paid-in capital

150,000

Retained earnings

328,000

Total assets

$

1,125,000

Total liabilities and equity

$

1,125,000

Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as a percent rounded to 2 decimal places.)

a.

Current ratio

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b.

Quick ratio

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times

c.

Debt-to-total-assets ratio

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%

d.

Asset turnover

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times

e.

Average collection period

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days

Using the income statement for Times Mirror and Glass Co., compute the following ratios:

TIMES MIRROR AND GLASS Co. Income Statement

Sales

$

211,000

Cost of goods sold

110,000

Gross profit

$

101,000

Selling and administrative expense

45,300

Lease expense

10,200

Operating profit*

$

45,500

Interest expense

12,800

Earnings before taxes

$

32,700

Taxes (30%)

13,080

Earnings after taxes

$

19,620

*Equals income before interest and taxes.

a.

Compute the interest coverage ratio. (Round your answer to 2 decimal places.)

Interest coverage

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b.

Compute the fixed charge coverage ratio. (Round your answer to 2 decimal places.)

Fixed charge coverage

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The total assets for this company equal $250,000. Set up the equation for the Du Pont system of ratio analysis.

c.

Compute the profit margin ratio. (Input your answer as a percent rounded to 2 decimal places.)

Profit margin

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d.

Compute the total asset turnover ratio. (Round your answer to 2 decimal places.)

Total asset turnover

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times

e.

Compute the return on assets (investment). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Return on assets

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A firm has net income before interest and taxes of $179,000 and interest expense of $29,500.

a.

What is the times-interest-earned ratio? (Round your answer to 2 decimal places.)

Times-interest earned

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times

b.

If the firm’s lease payments are $44,000, what is the fixed charge coverage? (Round your answer to 2 decimal places.)

Fixed charge coverage

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times

Quantum Moving Company has the following data. Industry information also is shown.

Company data

Industry Data on

Year

Net Income

Total Assets

Net Income/Total Assets

2011

$

382,000

$

2,885,000

11.8

%

2012

419,000

3,269,000

7.7

2013

401,000

3,842,000

4.6

Year

Debt

Total Assets

Industry Data on Debt/Total Assets

2011

$

1,711,000

$

2,885,000

56.6

%

2012

1,826,000

3,269,000

45.0

2013

1,944,000

3,842,000

33.0

a.

Calculate the company's data in terms of: (Input your answers as a percent rounded to 1 decimal place.)

2011

2012

2013

Net income/Total assets

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Debt/Total assets

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b.

As an industry analyst comparing the firm to the industry, are you likely to praise or criticize the firm in terms of:

Praise/Criticize

Net income/Total assets

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Debt/Total assets

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The Canton Corporation shows the following income statement. The firm uses FIFO inventory accounting.

CANTON CORPORATION Income Statement for 2013

Sales

$

152,100

(11,700 units at $13.00)

Cost of goods sold

93,600

(11,700 units at $8.00)

Gross profit

$

58,500

Selling and administrative expense

9,126

Depreciation

19,400

Operating profit

$

29,974

Taxes (30%)

8,992

Aftertax income

$

20,982

a.

Assume in 2014 the same 11,700-unit volume is maintained, but that the sales price increases by 10 percent. Because of FIFO inventory policy, old inventory will still be charged off at $8.00 per unit. Also assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute aftertax income for 2014. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Aftertax income

$ n/r incorrect

b.

In part a, by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Gain in aftertax income

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c.

Now assume that in 2015 the volume remains constant at 11,700 units, but the sales price decreases by 15 percent from its year 2014 level. Also, because of FIFO inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $8.50 per unit. Further, assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute the aftertax income. (Round the sales price per unit to 2 decimal places but do not round any other intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Aftertax income

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The Griggs Corporation has credit sales of $1,137,650.

Total assets turnover

3.05

times

Cash to total assets

1.70

%

Accounts receivable turnover

10

times

Inventory turnover

10

times

Current ratio

2.46

times

Debt to total assets

30

%

Using the above ratios, complete the balance sheet. (Round your answers to the nearest whole number.)

GRIGGS CORPORATION Balance Sheet 2011

Assets

Liabilities and Stockholders' Equity

Cash

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Current debt

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Accounts receivable

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Long-term debt

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Inventory

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Total current assets

$ n/r incorrect

Total debt

$ n/r incorrect

Fixed assets

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Equity

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Total assets

$ n/r incorrect

Total debt and stockholders' equity

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Using the financial statements for the Snider Corporation, calculate the 13 basic ratios found in the chapter.

SNIDER CORPORATION Balance Sheet December 31, 2013

Assets

Current assets:

Cash

$

54,200

Marketable securities

28,800

Accounts receivable (net)

180,000

Inventory

244,000

Total current assets

$

507,000

Investments

60,400

Plant and equipment.

$

658,000

Less: Accumulated depreciation

255,000

Net plant and equipment

403,000

Total assets

$

970,400

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

94,800

Notes payable

78,400

Accrued taxes

14,500

Total current liabilities

$

187,700

Long-term liabilities:

Bonds payable

159,800

Total liabilities

$

347,500

Stockholders' equity

Preferred stock, $50 par value

$

100,000

Common stock, $1 par value

80,000

Capital paid in excess of par

190,000

Retained earnings

252,900

Total stockholders' equity

$

622,900

Total liabilities and stockholders' equity

$

970,400

SNIDER CORPORATION Income Statement For the Year Ending December 31, 2013

Sales (on credit)

$

2,070,000

Cost of goods sold

1,377,000

Gross profit

$

693,000

Selling and administrative expenses

505,000

*

Operating profit (EBIT)

$

188,000

Interest expense

34,200

Earnings before taxes (EBT)

$

153,800

Taxes

85,800

Earnings after taxes (EAT)

$

68,000

*Includes $35,800 in lease payments.

Using the above financial statements for the Snider Corporation, calculate the following ratios.

a.

Profitability ratios. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

Profitability Ratios

Profit margin

n/r incorrect %

Return on assets (investment)

n/r incorrect %

Return on equity

n/r incorrect %

b.

Assets utilization ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Assets Utilization Ratios

Receivable turnover

n/r incorrect

times

Average collection period

n/r incorrect

days

Inventory turnover

n/r incorrect

times

Fixed asset turnover

n/r incorrect

times

Total asset turnover

n/r incorrect

times

c.

Liquidity ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Liquidity Ratios

Current ratio

n/r incorrect

times

Quick ratio

n/r incorrect

times

d.

Debt utilization ratios. (Do not round intermediate calculations. Input your debt to total assets answer as a percent rounded to 2 decimal places. Round your other answers to 2 decimal places.)

Debt Utilization Ratios

Debt to total assets

n/r incorrect

%

Times interest earned

n/r incorrect

times

Fixed charge coverage

n/r incorrect

times

Given the financial statements for Jones Corporation and Smith Corporation:

JONES CORPORATION

Current Assets

Liabilities

Cash

$

29,400

Accounts payable

$

103,000

Accounts receivable

88,300

Bonds payable (long term)

80,100

Inventory

54,500

Long-Term Assets

Stockholders' Equity

Gross fixed assets

$

508,000

Common stock

$

150,000

Less: Accumulated depreciation

156,800

Paid-in capital

70,000

Net fixed assets*

351,200

Retained earnings

120,300

Total assets

$

523,400

Total liabilities and equity

$

523,400

Sales (on credit)

$

1,845,000

Cost of goods sold

757,000

Gross profit

$

1,088,000

Selling and administrative expense†

325,000

Depreciation expense

59,400

Operating profit

$

703,600

Interest expense

16,300

Earnings before taxes

$

687,300

Tax expense

95,600

Net income

$

591,700

*Use net fixed assets in computing fixed asset turnover.

†Includes $15,500 in lease payments.

SMITH CORPORATION

Current Assets

Liabilities

Cash

$

40,700

Accounts payable

$

84,400

Marketable securities

15,800

Bonds payable (long term)

283,000

Accounts receivable

75,900

Inventory

75,400

Long-Term Assets

Stockholders' Equity

Gross fixed assets

$

592,000

Common stock

$

75,000

Less: Accumulated depreciation

251,100

Paid-in capital

30,000

Net fixed assets*

340,900

Retained earnings

76,300

Total assets

$

548,700

Total liabilities and equity

$

548,700

*Use net fixed assets in computing fixed asset turnover.

SMITH CORPORATION

Sales (on credit)

$

1,150,000

Cost of goods sold

659,000

Gross profit

$

491,000

Selling and administrative expense†

285,000

Depreciation expense

57,300

Operating profit

$

148,700

Interest expense

23,800

Earnings before taxes

$

124,900

Tax expense

53,600

Net income

$

71,300

†Includes $15,500 in lease payments.

a.

Compute the following ratios. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.)

Jones Corp.

Smith Corp.

Profit margin

n/r incorrect

%

n/r incorrect

%

Return on assets (investments)

n/r incorrect

%

n/r incorrect

%

Return on equity

n/r incorrect

%

n/r incorrect

%

Receivable turnover

n/r incorrect

times

n/r incorrect

times

Average collection period

n/r incorrect

days

n/r incorrect

days

Inventory turnover

n/r incorrect

times

n/r incorrect

times

Fixed asset turnover

n/r incorrect

times

n/r incorrect

times

Total asset turnover

n/r incorrect

times

n/r incorrect

times

Current ratio

n/r incorrect

times

n/r incorrect

times

Quick ratio

n/r incorrect

times

n/r incorrect

times

Debt to total assets

n/r incorrect

%

n/r incorrect

%

Times interest earned

n/r incorrect

times

n/r incorrect

times

Fixed charge coverage

n/r incorrect

times

n/r incorrect

times