Problem: Financial Statement Analysis at ABC

ABC Company Income Statement For the Year Ending December 31 (USD thousands)
	2011	2010
Sales	450,000	380,000
Cost of sales	235,000	205,000
Gross profit	215,000	175,000
Operating expenses
Management salaries	105,000	85,000
Rent	25,000	23,000
Depreciation	10,000	8,000
Telephone	1,500	700
Repairs and maintenance	6,000	5,000
Wages and benefits	26,000	20,000
Miscellaneous	2,000	1,500
Total operating expenses	175,500	143,200
Income before interest and taxes	39,500	31,800
Interest expense	25,000	20,000
Income taxes	3,000	2,500
Net income	11,500	9,300

ABC Company Balance Sheet As of December 31 (USD thousands)
	2011	2010
Current assets
Cash and cash equivalents	18,000	25,000
Short-term investments	35,000	30,000
Accounts receivable	7,000	4,000
Inventory	90,000	80,000
Prepaid expenses	2,000	1,500
Total current assets	152,000	140,500
Fixed assets
Land	50,000	50,000
Building	200,000	200,000
Equipment	175,000	125,000
Sub-total	425,000	375,000
Less: accumulative depreciation	(102,000)	(92,000)
Total fixed assets	323,000	283,000
Total assets	475,000	423,500
Current liabilities
Accounts payable	60,000	50,000
Operating line of credit	15,000	10,000
Current portion of long-term debt	10,000	10,000
Total current liabilities	85,000	70,000
Long-term liabilities
Bond payable	190,000	165,000
Shareholders equity
Preferred shares	5,000	5,000
Common shares	15,000	10,000
Retained earnings	180,000	173,500
Total shareholders equity	200,000	188,500
Total liabilities and shareholders equity	475,000	423,500

Other information

Approximately 15.0% of ABCs sales are on credit at terms net 30. All inventory purchases are on credit at terms net 60.

The market value of ABCs common share is USD 22.00 and it has 10,000 common shares and 5,000 preferred shares outstanding. The preferred shares pay a USD 0.10 annual dividend. The common share dividend in 2011 was USD 0.45. The tax rate is 21.0%.

Required:

1. Calculate the following ratios:

Net operating cycle

Net working capital turnover

Fixed asset turnover

Total asset turnover