Use the following information to answer the questions on page 2 below:
(note: all sales are credit sales)
Income Stmt info: 2013 2014
Sales $ 1,100,000 $ 1,188,000
less Cost of Goods Sold: 450,000 481,500
Gross Profit 650,000 706,500
Operating Expenses 330,000 346,500
Earnings before Interest & Taxes 320,000 360,000
Interest exp 25,000 30,000
earnings before Taxes 295,000 330,000
Taxes 118,000 132,000
Net Income $ 177,000 $ 198,000
Balance Sheet info: 12/31/2013 12/31/2014
Cash 60,000 $ 72,000
Accounts Receivable 80,000 $ 81,600
Inventory 110,000 $ 135,000
Total Current Assets $ 250,000 $ 288,600
Fixed Assets (Net) $ 300,000 $ 315,000
Total Assets $ 550,000 $ 603,600
Current Liabilities $ 130,000 $ 139,100
Long Term Liabilities $ 150,000 $ 183,000
Total Liabilities $ 280,000 $ 322,100
Stockholder's Equity $ 270,000 $ 281,500
Total Liab & Equity: $ 550,000 $ 603,600
Compute each of the following ratios for 2013 and 2014 and
indicate whether each ratio was getting "better" or "worse" from 2013 to 2014
and was "good" or "bad" compared to the Industry Avg in 2014
(round all numbers to 2 digits past the decimal place)
2013 2014 Getting Better or Getting Worse? 2014 Industry Avg "Good" or "Bad" compared to Industry Avg
Profit Margin 0.11
Current Ratio 1.90
Quick Ratio 1.12
Return on Assets .28
Debt to Assets .55
Receivables turnover 18.00
Avg. collection period* 21.20
Inventory Turnover** 8.25
Return on Equity 0.55
Times Interest Earned 11.15
*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)