s.no | 2016 | 2017 | % change | |
LIQUIDITY : | ||||
1) | Current ratio | $ 1.98 : 1 | $ 1.78 : 1 | {1.78-1.98 /1.98 } = (10 .10 %) |
2) | Accounts receivable turnover | $ 8.67 times | $ 8.95 times | {8.95 -8.67 /8.67 } = 3.23 % |
3) | Inventory turnover | $ 4.03 times | $ 3.18 times | {3.18 -4.03/ 4.03 }= (21.09 %) |
2016 | 2017 | % change | ||
PROFITABILITY : | ||||
4) | Profit margin | 6.84% | 6.79% | {6.79 -6.84 / 6.84 }= (0.73%) |
5) | Asset turnover | $ 1.17 times | $ 1.12 times | {$ 1.12 -$ 1.17 / $ 1.17 }= (4.27%) |
6) | Return on assets | 8.02% | 7.63% | {7.63 -8.02 / 8.02 }= (4.86%) |
7) | Earnings per share | $ 2.58 | $ 2.92 | {$ 2.92 -$ 2.58 / $ 2.58 }= 13.18 % |
2017 | 2018 | % change | ||
8) | Return on common stockholders | 25.84% | 677.77% | {677.77-25.84 / 25.84 } = 25.23 % |
equity | ||||
9) | Debt to assets ratio | 59.86% | 41.28% | {41.28 -59.86 /59.86 }= (31.04) |
10) | Price earnings ratio | 3.08 times | 0.20 times | {0.20 -3.08 / 3.08 }= (93.51 % ) |
EXPLANATION : | |||||
1) Current ratio = total current assets / total current liabilities | |||||
here total current assets = cash + debt investments ( short term ) + accounts receivable +inventory + prepaid expense | |||||
total current assets for 2016 = 68000+42000+92000 + 169000+ 25000 = $ 396,000 | |||||
total current assets for 2017 = 72000+51000 +109000 + 237000+ 28000 = $ 497,000 | |||||
here total current liabilities = notes payable + accounts payable + accured liabilities | |||||
total current liabilities for 2016 = 109,000+ 50,000+ 41,000 = $ 200,000 | |||||
total current liabilities for 2017 = 169,000+ 69,000+ 41,000 = $ 279,000 | |||||
current ratio for 2016 = $ 396,000 / $ 200,000 = $ 1.98 : 1 | |||||
current ratio for 2016 = $ 497,000 / $ 279,000 = $ 1.78 : 1 | |||||
2) accounts receivable turnover = net credit sales / average accounts receivables | |||||
here all sales were on account so, all sales are treated as credit sales | |||||
average accounts receivables = beginning accounts receivables + ending accounts receivable / 2 | |||||
average accounts receivables for 2016 = $ 90,000 + 92,000 / 2 = $ 91,000 | |||||
average accounts receivables for 2017 = $ 92,000 + 109,000 / 2 = $ 100,500 | |||||
accounts receivable turnover for 2016 = $ 789,000 / $ 91,000 = $ 8.67 times | |||||
accounts receivable turnover for 2017 = $ 899,000 / $ 100,500 = $ 8.95 times | |||||
3) inventory turnover = cost of goods sold / average inventory | |||||
average inventory = beginning inventory + ending inventory / 2 | |||||
average inventory for 2016 = 117,000 + 169,000 / 2 = $ 143,000 | |||||
average inventory for 2017 = 169,000 + 237,000 / 2 = $ 203,000 | |||||
inventory turnover for 2016 = 576,000 / 143,000 = $ 4.03 times | |||||
inventory turnover for 2017 = 646,000 / 203,000 = $ 3.18 times | |||||
4) profit margin = net income / net sales revenue | |||||
profit margin for 2016 = $ 54,000 / $ 789,000 = 6.84 % | |||||
profit margin for 2017 = $ 61,000 / $ 899,000 = 6.79 % | |||||
5) assets turnover = net sales revenue / average total assets | |||||
average total assets = beginning total assets + ending totals assets / 2 | |||||
average total assets for 2016 = 634,000 + 713,000 /2 = $ 673,500 | |||||
average total assets for 2017 = 713,000 + 887,000 /2 = $ 800,000 | |||||
assets turnover for 2016 = $ 789,000 / $ 673,500 =1.17 times | |||||
assets turnover for 2017 = $ 899,000 / $ 800,000 =1.12 times | |||||
6) return on assets = net income / average total assets | |||||
return on assets for 2016 = $ 54,000 / $ 673,500 = 8.02 % | |||||
return on assets for 2017 = $ 61,000 / $ 800,000 = 7.63 % | |||||
7) earning per share = (net income - preferred dividends ) / common share outstanding | |||||
here there is no preferred stock so, preferred dividend is 0 | |||||
common share outstanding = common stock ( in amount ) / par value | |||||
common share outstanding for 2016 = $ 209,000/ $ 10 = 20,900 shares | |||||
common share outstanding for 2017 = $ 209,000/ $ 10 = 20,900 shares | |||||
earning per share for 2016 = ($ 54,000 - $ 0 ) / 20,900 shares = $ 2.58 per share | |||||
earning per share for 2017 = ($ 61,000 - $ 0 ) / 20,900 shares = $ 2.92 per share | |||||
8) return on common stockholders equity = net income / shareholders equity | |||||
return on common stockholders equity = $ 54,000 / 20,900 shares * $ 10 = 25.84 % | |||||
return on common stockholders equity = $ 61,000 / ( 20,900 shares *$ 10 - $ 20,000 *$ 10) = 677.77 % | |||||
9) debt to assets ratio = total debt / total assets | |||||
total debt = notes payable + accounts payable + accured liabilities + bond payables | |||||
total debt for 2017 = 169,000+ 69,000+ 41,000 + 252,000= $ 531,000 | |||||
total debt for 2018 = 69,000+ 41,000 + 252,000= $ 362,000 | |||||
debt to assets ratio for 2017 = $ 531,000 / $ 887,000 = 59.86 % | |||||
debt to assets ratio for 2018 = $ 362,000 / $ 877,000 = 41.28 % | |||||
10) price earning ratio = market price of common stock / earmning per share | |||||
price earning ratio for 2017 = $ 9 per share / 2.92 per share = 3.08 times | |||||
earning per share for 2018 = net income / common share outstanding | |||||
earning per share for 2018 = $ 55,000 / (20,900 shares - 20,000 shares) = $ 61.11 per share | |||||
price earning ratio for 2018 = $ 12 per share / $ 61.11 per share = 0.20 times |
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