Sheet1
| BUSI 320 Comprehensive Problem 1 Version FALL | ||||
| Use the following information to answer the questions below: | ||||
| note: all sales are credit sales | ||||
| Income Stmt info: | 2016 | 2017 | ||
| Sales | $ 975,000 | $ 1,072,500 | ||
| less Cost of Goods Sold: | 325,000 | 346,125 | ||
| Gross Profit | 650,000 | 726,375 | ||
| Operating Expenses | 575,000 | 609,500 | ||
| Earnings before Interest & Taxes | 75,000 | 116,875 | ||
| Interest exp | 25,000 | 31,000 | ||
| earnings before Taxes | 50,000 | 85,875 | ||
| Taxes | 20,000 | 34,350 | ||
| Net Income | $ 30,000 | $ 51,525 | ||
| Balance Sheet info: | 12/31/16 | 12/31/17 | ||
| Cash | 60,000 | $ 63,600 | ||
| Accounts Receivable | 80,000 | $ 84,000 | ||
| Inventory | 110,000 | $ 126,500 | ||
| Total Current Assets | $ 250,000 | $ 274,100 | ||
| Fixed Assets (Net) | $ 300,000 | $ 312,000 | ||
| Total Assets | $ 550,000 | $ 586,100 | ||
| Current Liabilities | $ 130,000 | $ 149,500 | ||
| Long Term Liabilities | $ 150,000 | $ 170,000 | ||
| Total Liabilities | $ 280,000 | $ 319,500 | ||
| Stockholder’s Equity | $ 270,000 | $ 266,600 | ||
| Total Liab & Equity: | $ 550,000 | $ 586,100 | ||
| Compute each of the following ratios for 2016 and 2017 and | ||||
| indicate whether each ratio was getting “better” or “worse” from 2016 to 2017 | ||||
| and whether the 2017 ratio was “good” or “bad” compared to the Industry Avg | ||||
| (round all numbers to 2 digits past the decimal place) | ||||
| 2016 | 2017 | Getting Better or Getting Worse? | 2017 Industry Avg | “Good” or “Bad” compared to Industry Avg |
| Profit Margin | 0.09 | |||
| Current Ratio | 1.80 | |||
| Quick Ratio | 1.12 | |||
| Return on Assets | 0.18 | |||
| Debt to Assets | 0.60 | |||
| Receivables turnover | 12.00 | |||
| Avg. collection period* | 22.10 | |||
| Inventory Turnover** | 8.25 | |||
| Return on Equity | 0.16 | |||
| Times Interest Earned | 8.15 | |||
| *Assume a 360 day year | ||||
| **Inventory Turnover can be computed 2 different ways. Use the formula listed in the text | ||||
| (the one the text indicates many credit reporting agencies generally use) |
