Problem 3-37 Ratio computation and analysis [LO2]

Given the financial statements for Jones Corporation and Smith Corporation:

JONES CORPORATION
Current Assets	Liabilities
Cash			$	123,300	Accounts payable	$	176,000
Accounts receivable				183,600	Bonds payable (long term)		89,600
Inventory				56,800
Long-Term Assets	Stockholders' Equity
Gross fixed assets	$	554,000			Common stock	$	150,000
Less: Accumulated depreciation		152,300			Paid-in capital		70,000
Net fixed assets*				401,700	Retained earnings		279,800
Total assets			$	765,400	Total liabilities and equity	$	765,400

Sales (on credit)	$	1,255,000
Cost of goods sold		678,000
Gross profit	$	577,000
Selling and administrative expense		355,000
Depreciation expense		59,400
Operating profit	$	162,600
Interest expense		11,300
Earnings before taxes	$	151,300
Tax expense		82,500
Net income	$	68,800

*Use net fixed assets in computing fixed asset turnover.

Includes $12,700 in lease payments.

SMITH CORPORATION
Current Assets	Liabilities
Cash			$	44,000	Accounts payable	$	83,700
Marketable securities				7,900	Bonds payable (long term)		290,000
Accounts receivable				73,700
Inventory				77,500
Long-Term Assets	Stockholders' Equity
Gross fixed assets	$	557,000			Common stock	$	75,000
Less: Accumulated depreciation		251,800			Paid-in capital		30,000
Net fixed assets*				305,200	Retained earnings		29,600
Total assets			$	508,300	Total liabilities and equity	$	508,300

*Use net fixed assets in computing fixed asset turnover.

SMITH CORPORATION
Sales (on credit)	$	1,430,000
Cost of goods sold		919,000
Gross profit	$	511,000
Selling and administrative expense		299,000
Depreciation expense		57,500
Operating profit	$	154,500
Interest expense		30,600
Earnings before taxes	$	123,900
Tax expense		59,900
Net income	$	64,000

Includes $12,700 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