Solve Problems 4-11 - Short Answers: Using the information provided below for ABC, Inc.,

please write the appropriate calculations and/or short answer to the below questions (4 points

each) :

ABC, Inc. Balance Sheet (in thousands)

December 31, 2014

Assets

Cash $ 2,000

Accounts receivable 17,800

Inventories 8,700

Total current assets 28,500

Gross fixed assets 70,000

Accumulated depreciation 26,500

Net fixed assets 43,500

Total assets $72,000

Liabilities and Equity

Accounts payable $18,000

Accruals 13,350

Total current liabilities 31,350

Long-term debt 8,250

Total liabilities 39,600

Common stock (par value and paid in capital) 2,000

Retained earnings 30,400

Total stockholders' equity 32,400

Total Liabilities and Equity $72,000

ABC, Inc. Income Statement (in thousands)

December 31, 2014

Sales (all credit) $200,000

Cost of goods sold 140,000

Gross profit on sales 60,000

Operating expenses 56,000

Operating income 4,000

Interest expense 1,000

Earnings before tax 3,000

Income tax 1,050

Net income available to common stockholders $ 1,950

ABC, Inc. 2013 Ratios Industry Average Ratios in 2013

Current ratio 1.2 1.4

Acid test ratio 0.89 0.94

Average collection period 30 days 25 days

Inventory turnover 18.1 20.3

Fixed assets turnover 4.1 4.8

Total asset turnover 2.78 2.8

Debt ratio 50% 60%

Times-interest-earned 5.5% 4.5%

Net profit margin 1.15% 1.5%

Return on equity 5.21% 7.32%

4) In 2014, ABC's average collection period is:

5) In 2014, ABC's inventory turnover is:

6) In 2014, ABC's fixed asset turnover is:

7) Since 2013, ABC's efficiency at using its assets has:

8) In 2014, the improvement in ABC's return on equity occurred because:

9) Since 2013, ABC's liquidity has:

10) Since 2013, ABC's inventory management has:

11) How has the company's financial condition changed since 2013? How does it compare to

its industry?