Liquidity and Profitability Ratios
Julio Company has had poor operating results for the past two years. As Julio's accountant, you have the following information available to you:
| |
2014 |
|
2013 |
| Current assets |
$49,500 |
|
$39,500 |
| Total assets |
145,000 |
|
110,000 |
| Current liabilities |
20,200 |
|
10,100 |
| Long-term liabilities |
20,200 |
|
- |
| Stockholders' equity |
96,000 |
|
99,900 |
| Net sales |
203,000 |
|
153,000 |
| Net income |
16,000 |
|
11,000 |
Total assets and stockholders' equity at the beginning of 2013 were $90,000 and $80,000, respectively. Assume that there was a dividend distribution in 2013.
1. Compute the following measures of liquidity for 2013 and 2014: (a) working capital and (b) current ratio. Round your current ratio values to one decimal place.
| |
2014 |
|
2013 |
| a. Working capital |
mce_markernbsp; |
|
mce_markernbsp; |
| b. Current ratio |
|
2. Compute the following measures of profitability for 2013 and 2014: (a) profit margin, (b) asset turnover, (c) return on assets, (d) debt to equity ratio, and (e) return on equity. Round your answers to one decimal place.
| |
2014 |
2013 |
| a. Profit margin |
% |
% |
| b. Asset turnover |
times |
times |
| c. Return on assets |
% |
% |
| d. Debt to equity ratio |
% |
% |
| e. Return on equity |
% |
% |