294 Chapter 5 been operating for two in some insight into ments for the first Problem 21 The Mantle Inn commenced operations on January 1, 20X1, and has been ope years. Assume that you are the new assistant manager and desire to gain some the Inn's financial condition. Balance sheets and condensed income statements fe two years are as follows: Balance Sheets Mantle Inn December 31, 20X1 and 20X2 20X1 20X2 $ 10,000 $ 55,000 10,000 75,000 15,000 50,000 60,000 12,000 137,000 Assets Current Assets: Cash Marketable Securities Accounts Receivable Inventories Total Current Assets Property and Equipment: Land Building (net) Furniture & Equipment (net) Total Property & Equipment Total Assets 100,000 1,950,000 240,000 2,290,000 $2,365,000 100,000 1,900,000 200,000 2,200,000 $2,337,000 $ 55,000 1,300,000 1,355,000 $ 60,000 1,250,000 1,310,000 Liabilities and Owners' Equity Current Liabilities Long-Term Debt Total Liabilities Owners' Equity Common Stock Retained Earnings Total Owners' Equity Total Liabilities and Owners' Equity 1,000,000 10,000 1,010,000 $2,365,000 1,000,000 27,000 1,027,000 $2,337,000 Condensed Income Statements Mantle Inn For the years ended December 31, 20X1 and 20X2 20X1 20X2 Sales $1,200,000 $1,400,000 Operated Department Expense 620,000 700,000 Operated Department Income 580,000 700,000 Undistributed Operating Expenses 380,000 400,000 Gross Operating Profit 200,000 300,000 Non-Operating Expenses 185,000 200,000 Income Taxes 5,000 45,000 Net Income $ 10,000 $ 55,000 Required: 1. Calculate the following ratios for both years: a. Current ratio b. Solvency ratio c. Profit margin d. Operating efficiency 2. Calculate for 20x2 the following ratios: a. Property and equipment turnover ratio b. Total assets turnover ratio c. Accounts receivable turnover ratio d. Number of days accounts receivable outstanding e. Return on total assets f. Return on owners' equity