After calculating the ratios for Smolira Golf, you have uncovered the following industry ratios for 2019: How
Question:
After calculating the ratios for Smolira Golf, you have uncovered the following industry ratios for 2019:
How is Smolira Golf performing based on these ratios?
Some recent financial statements for Smolira Golf, Inc., follow.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Lower Quartile Median Upper Quartile Current ratio 2.6 1.3 5.3 2.1 2.7 Total asset turnover 4.1 Debt-equity ratio .50 .60 .23 Profit margin 16.3% 8.4% 11.2% SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Liabilities and Owners' Equity Current assets Current liabilities $ 5,298 $ 3,754 $ 3,986 Cash 5,827 Accounts payable Accounts receivable 7,707 8,477 Notes payable 3,045 3,318 Inventory 12,150 21,956 Other 152 179 $ 25,155 $ 36,260 $ 6,951 $ 24,700 Total Total $ 7,483 Long-term debt $ 16,000 Owners' equity Common stock and paid-in surplus $ 40,000 $ 37,000 Fixed assets Accumulated retained earnings 28,805 55,189 Net plant and equipment $ 75,301 $ 79,412 Total $ 68,805 $ 92,189 Total assets $100,456 $115,672 Total liabilities and owners' equity $100,456 $115,672 SMOLIRA GOLF, INC. 2019 Income Statement $229,854 184,317 Sales Cost of goods sold Depreciation 8,730 EBIT $ 36,807 Interest paid 1,811 Taxable income $ 34,996 Taxes 7,349 Net income $ 27,647 Dividends $16,000 Addition to retained earnings 11,647
Step by Step Answer:
The current ratio appears to be relatively high when compared to the median however it is below the ...View the full answer
Essentials of Corporate Finance
ISBN: 978-1260013955
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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