# Scully Corporation’s comparative balance sheets are presented below. SCULLY CORPORATION?

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.

• (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.