Problem 3-37 Ratio computation and analysis [LO2]

Given the financial statements for Jones Corporation and Smith Corporation:

JONES CORPORATION
Current Assets					Liabilities
Cash			$	26,100	Accounts payable	$	117,000
Accounts receivable				81,600	Bonds payable (long term)		89,400
Inventory				56,900
Long-Term Assets					Stockholders' Equity
Gross fixed assets	$	504,000			Common stock	$	150,000
Less: Accumulated depreciation		150,100			Paid-in capital		70,000
Net fixed assets*				353,900	Retained earnings		92,100
Total assets			$	518,500	Total liabilities and equity	$	518,500

Sales (on credit)	$	1,312,000
Cost of goods sold		765,000
Gross profit	$	547,000
Selling and administrative expense		291,000
Depreciation expense		57,100
Operating profit	$	198,900
Interest expense		12,400
Earnings before taxes	$	186,500
Tax expense		97,900
Net income	$	88,600

*Use net fixed assets in computing fixed asset turnover.

Includes $14,800 in lease payments.

SMITH CORPORATION
Current Assets					Liabilities
Cash			$	38,200	Accounts payable	$	75,600
Marketable securities				7,600	Bonds payable (long term)		227,000
Accounts receivable				76,200
Inventory				82,800
Long-Term Assets					Stockholders' Equity
Gross fixed assets	$	507,000			Common stock	$	75,000
Less: Accumulated depreciation		252,200			Paid-in capital		30,000
Net fixed assets*				254,800	Retained earnings		52,000
Total assets			$	459,600	Total liabilities and equity	$	459,600

*Use net fixed assets in computing fixed asset turnover.

SMITH CORPORATION
Sales (on credit)	$	1,070,000
Cost of goods sold		632,000
Gross profit	$	438,000
Selling and administrative expense		228,000
Depreciation expense		50,400
Operating profit	$	159,600
Interest expense		25,700
Earnings before taxes	$	133,900
Tax expense		54,500
Net income	$	79,400

Includes $14,800 in lease payments.

a.

Compute the following ratios. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.)

	Jones Corp.		Smith Corp.
Profit margin		%		%
Return on assets (investments)		%		%
Return on equity		%		%
Receivable turnover		times		times
Average collection period		days		days
Inventory turnover		times		times
Fixed asset turnover		times		times
Total asset turnover		times		times
Current ratio		times		times
Quick ratio		times		times
Debt to total assets		%		%
Times interest earned		times		times
Fixed charge coverage		times		times