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The following summaries from the income statements and balance sheets of Koutis Company and Brittania, Inc. are presented bel1 S 55.3 425.2 Current liabilities Current portion of long-term debt Notes payable Accounts payable Accrued liabilities IncomBrittania, Inc. Consolidated Balance Sheets Dec. 31. 1 Dec. 31. 1 Year 2 Year 1 Assets Current assets: Cash and cash equivale$133. 46.2 Brittania, Inc. Consolidated Statement of Income December 31, Year 2 (in millions) Revenues Cost of sales Gross pr

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Answer #1

Requirement 1

a.Current Ratio = Current Assets / Current Liabilities

Kouris Company = 4679.9 / 2015.2 = 2.32

Brittania Inc. = 80.7 / 16.3 = 4.95

b.Acid Test Ratio = Quick Assets / Current Liabilities

Kouris Company = ( 634 + 2101.1 ) / 2015.2 = 1.36

Brittania Inc. = (34.5 + 15.5 ) / 16.3 = 3.07

c.Account Receivable Turnover = Sales / Avg. Account Receivable

Kouris Company = 10697 / ( 2101.1 + 1804.1) / 2 = 10697 / 1952.6 = 5.48

Brittania Inc. = 133.5 / ( 15.5 + 14.7 ) / 2 = 133.5 / 15.1 = 8.84

d.Inventory Turnover = Cost of goods sold / Avg. Inventory

Kouris Company = 6313.6 / ( 1514.90 + 1373.8 ) / 2 = 6313.6 / 1444.35 = 4.37

Brittania Inc. = 87.3 / ( 27.2 + 28.4 ) / 2 = 87.3 / 27.8 = 3.14

e.Days Sales in Inventory = 365 / Inventory Turnover

Kouris Company = 365 / 4.37 = 83.52 Days

Brittania Inc. = 365 / 3.14 = 116.24 Days

f.Days Sales Uncollected = 365 / Account Receivable Turnover

Kouris Company = 365 / 5.48 = 66.61 Days

Brittania Inc. = 365 / 8.84 = 41.29 Days

Requirement 2

a.Profit Margin = Net Income / Sales

Kouris Company = 474 / 10697 = 4.43%

Brittania Inc. = 5.2 / 133.5 = 3.90%

b.Return on Total Assets = Net Income / Avg. Total Assets

Kouris Company = 474 / (6713.9 + 6440 ) / 2 = 474 / 6576.95 = 7.21%

Brittania Inc. = 5.2 / ( 87.5 + 78 ) / 2 = 5.2 / 82.75 = 6.28%

c.Return on Common Stockholders Equity = Net Income / Avg. Total Common Stockholders Equity

Kouris Company = 474 / ( 3990.7 + 3839)/2 = 474 / 3914.85 = 12.11%

Brittania Inc. = 5.2 / ( 68.7 + 63.2 ) / 2 = 5.2 / 65.95 = 7.88%

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