Scully Corporation’s comparative balance sheets are presented below.
SCULLY CORPORATION
Balance Sheets
December 31
2008 2007
Cash $ 4,300 $ 3,700
Accounts receivable 21,200 23,400
Inventory 10,000 7,000
Land 20,000 26,000
Building 70,000 70,000
Accumulated depreciation (15,000) (10,000)
Total $110,500 $120,100
Accounts payable $ 12,370 $ 31,100
Common stock 75,000 69,000
Retained earnings 23,130 20,000
Total $110,500 $120,100
Scully’s 2008 income statement included net sales of $100,000, cost of goods sold of $60,000, and
net income of $15,000.
Instructions
Compute the following ratios for 2008.
(a) Current ratio.
(b) Acid-test ratio.
(c) Receivables turnover.
(d) Inventory turnover.
(e) Profit margin.
(f) Asset turnover.
(g) Return on assets.
(h) Return on common stockholders’ equity.
(i) Debt to total assets ratio.
2 Answers
-
(a) Current ratio = 35,500/12,370 = 2.87:1
(b) Acid-test ratio = 25,500/12,370 = 2.06:1
(c) Receivables turnover = 100,000/22,300 = 4.48 times
(d) Inventory turnover = 60,000/8,500 = 7.06 times
(e) Profit margin = 15,000/100,000 = 15%
(f) Asset turnover = 100,000/115,300 = 0.87 times
(g) Return on assets = 15,000/115,300 = 13.01%
(h) Return on common stockholders’ equity = 15,000/93,565 = 16.03%
(i) Debt to total assets ratio = 12,370/110,500 = 11.19%
All the formulas are found in the link.
http://www.cliffsnotes.com/WileyCDA/CliffsReviewTo...
-
For the formulas and explanations of each ratio, go to the source below and type into the search box which type of ratio you want.
Source(s): http://www.investopedia.com/