a)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
a)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The
accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606. - The net income is $43,780.
- The
depreciation is $32,220. - The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Explanation:
Short-term solvency ratios:
Formula to calculate the current ratio:
Compute the current ratio:
Hence, the current ratio for 2011 is 1.32 times.
Hence, the current ratio for 2012 is 1.24 times.
b)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
b)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate Quick ratio:
Compute the quick ratio:
Hence, the quick ratio for 2011 is 0.78 times.
Hence, the quick ratio for 2012 is 0.73 times.
c)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
c)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the cash ratio:
Compute the cash ratio:
Hence, the cash ratio for 2011 is 0.51 times.
Hence, the cash ratio for 2012 is 0.45 times.
d)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
d)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the total asset turnover ratio:
Compute the total asset turnover ratio:
Hence, the total asset turnover ratio is 0.85 times.
e)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
e)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the inventory turnover ratio:
Compute the inventory turnover ratio:
Hence, the inventory turnover ratio is 9.32 times.
f)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
f)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the receivables turnover ratio:
Compute the receivables turnover ratio:
Hence, the receivables turnover ratio is 24.09 times.
g)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
g)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the total debt ratio:
Compute the total debt ratio:
Hence, the total debt ratio for 2011 is 0.33 times.
Hence, the total debt ratio for 2012 is 0.34 times.
h)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
h)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the debt-equity ratio:
Compute the debt-equity:
Hence, the debt-equity ratio for the year 2011 is 0.49 times.
Hence, the debt-equity ratio for the year 2012 is 0.52 times.
Note: The total debt is calculated by adding the total-long term debt and total current liabilities.
i)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
i)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the equity multiplier:
Compute the equity multiplier ratio for the year 2011:
Hence, the equity multiplier ratio for the year 2011 is 1.49 times.
Hence, the equity multiplier ratio for the year 2012 is 1.52 times.
j)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
j)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the times interest earned ratio:
Compute the times interest earned ratio:
Hence, the times interest earned is 5.71 times.
k)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
k)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the cash coverage ratio:
Compute the cash coverage ratio:
Hence, the cash coverage ratio is 7.96 times.
l)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
l)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the profit margin ratio:
Compute the profit margin:
Hence, the profit margin is 11.93%.
m)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
m)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the
Compute the Return on assets (ROA):
Hence, the return on assets is 0.1013 or 10.13%.
n)
To find: The financial ratios of Company SG.
Introduction:
The process of analysing and calculating the financial ratios in order to assess the performance of the firm and to find the actions that are necessary to improve the firm’s performance is called the ratio analysis.
n)
Explanation of Solution
Given information:
The balance sheet of the Company SG shows the following information:
- The total assets for the year 2011 are $386,581 and for 2012 are $432,379.
- The current assets for the year 2011 are $61,886 and for 2012 are $66,645.
- The current liabilities for the year 2011 are $46,755 and for 2012 are $53,773.
- The total liabilities and equity for the year 2011 are 386,581 and for 2012 are $432,379.
- The cash at the beginning and end of the year is $24,046 and $24,255 respectively.
- The accounts receivable for the year 2011 and 2012 is $12,448 and $15,235 respectively.
- The inventory for the year 2011 and 2012 is $25,392 and $27,155 respectively.
- The fixed asset for the year 2011 and 2012 is $324,695 and $365,734 respectively.
- The accounts payable for the year 2011 and 2012 is $23,184 and $27,420 respectively.
- The other current liabilities for the year 2011 and 2012 are $11,571 and $15,553 respectively.
- The notes payable for the year 2011 and 2012 is $12,000 and $10,800 respectively.
- The long-term debt for the year 2011 and 2012 is $80,000 and $95,000.
- The common stock and paid in surplus for 2011 are $40,000 and for 2012 are $40,000.
- The accumulated retained earnings for 2011 are $219,826 and 2012 are $243,606.
- The net income is $43,780.
- The depreciation is $32,220.
- The dividend paid is $20,000.
- The cost of goods sold amounts to $253,122.
- The sales is $366,996.
- The earnings before interest and taxes are $81,654.
- The interest paid is $14,300.
- The retained earnings are $23,780.
- The taxable income is $67,354.
Formula to calculate the
Compute the Return on equity (ROE):
Hence, the return on equity is 0.1544 or 15.44%.
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