BUSI 320 Comprehensive Problem 1 Spring 2019

Use the following information to answer the questions on page 2 below:

Note:all sales are credit sales.

Income Stmt info:

2018

2019

Sales

$1,000,000

$1,050,000

less Cost of Goods Sold:

400,000

432,000

Gross Profit

600,000

618,000

Operating Expenses

350,000

365,750

Earnings before Interest& Taxes

250,000

252,250

Interest exp

20,000

20,400

earnings before Taxes

230,000

231,850

Taxes

69,000

69,555

Net Income

$161,000

$162,295

Balance Sheet info:

12/31/2018

12/31/2019

Cash

25,000

$30,000

Accounts Receivable

50,000

$54,000

Inventory

125,000

$130,000

Total Current Assets

$200,000

$214,000

Fixed Assets (Net)

$300,000

$318,000

Total Assets

$500,000

$532,000

Current Liabilities

$110,000

$119,900

Long Term Liabilities

$180,000

$175,000

Total Liabilities

$290,000

$294,900

Stockholder's Equity

$210,000

$237,100

Total Liab & Equity:

$500,000

$532,000

Compute each of the following ratios for 2018 and 2019 and

indicate whether each ratio wasgetting "better" or "worse" from 2018 to 2019

and was "good" or "bad" compared to the Industry Avg in 2019

(round all numbers to 2 digits past the decimal place)

2018

2019

Getting Better or Getting Worse?

2019 Industry Avg

"Good" or "Bad" compared to Industry Avg

Profit Margin

0.11

Current Ratio

1.90

9uick Ratio

0.66

Return on Assets

.28

Debt to Assets

.50

Receivables turnover

18.00

Avg. collection period*

15.50

Inventory Turnover**

9.25

Return on Equity

0.55

Times Interest Earned

13.20

*Assume a 360 day year

**Inventory Turnover can be computed 2 different ways.Use the formula listed in the text