EAN Ltd.’s condensed financial statements provide the following information amounts in thousands.

                                       Income Statement
                                  For the Year Ended 2022
Sales revenue .......................................................................... ¥1,640,000
Cost of goods sold ...................................................................... (800,000)
Gross profit ................................................................................... 840,000
Selling and administrative expenses ........................................ (480,000)
Interest expense ........................................................................... (40,000)
Net income ................................................................................. ¥ 320,000

Instructions

a. Determine the following for 2022.

1. Current ratio at December 31.

2. Acid-test ratio at December 31.

3. Accounts receivable turnover.

4. Inventory turnover.

5. Return on assets.

6. Profit margin on sales.

b. Prepare a brief evaluation of the financial condition of EAN Ltd. and of the adequacy of its profits.

Transcribed Image Text:

EAN Ltd. Statement of Financial Position December 31, 2022 December 31, 2021 Property, plant, and equipment ¥ 897,000 ¥ 853,000 Current assets Inventory ¥440,000 ¥360,000 Prepaid expenses 3,000 7,000 Accounts receivable 158,000 80,000 Short-term investments 80,000 40,000 Cash 52,000 733,000 60,000 547,000 Total assets ¥1,400,000 ¥ 840,000 ¥1,630,000 Equity ¥ 990,000 Bonds payable 400,000 400,000 Current liabilities 240,000 160,000 ¥1,630,000 ¥1,400,000