Question

Based on the following balance sheet and income statement. Identify all financial ratios listed for each year. *Feel free to just do the first year! I need to check to make sure my answers are appropriate. Thanks!

ANNUAL BALANCE SHEET
($ Thousands)
						31-Dec-15	31-Dec-16
		31-Dec-15	31-Dec-16
ASSETS					Profitability Ratios (in %)
Cash & Short-Term Investments		$17.11	$25.05		Return on equity
Net Receivables		$1.62	$1.84		Return on assets
Inventories		$42.72	$39.68		Return on invested capital
Prepaid Expenses		$0.00	$0.00		Profit margin
Other Current Assets		$3.38	$2.93		Gross margin
Total Current Assets		$64.84	$69.49		Turnover-Control Ratios
					Asset turnover
Gross Plant, Property & Equipment		$63.75	$58.28		Fixed-asset turnover
Accumulated Depreciation		$36.16	$32.61		Inventory turnover
					Collection period (days)
Net Plant, Property & Equipment		$27.58	$25.67		Days' sales in cash
Intangibles		$5.88	$6.01		Payables period
Other Assets		$6.16	$5.81
					Leverage and Liquidity Ratios
TOTAL ASSETS		$104.47	$106.98		Assets to equity
					Debt to assets
LIABILITIES					Debt to equity
Long Term Debt Due In One Year		$0.00	$0.00		Times interest earned
Accounts Payable		$10.59	$11.91		Current ratio
Taxes Payable		$1.87	$2.01		Acid test
Accrued Expenses		$7.19	$6.91
Other Current Liabilities		$1.88	$1.85
Total Current Liabilities		$21.54	$22.67
Long Term Debt		$6.95	$19.79
Deferred Taxes		$1.16	$2.32
Other Liabilities		$3.04	$2.43
TOTAL LIABILITIES		$32.68	$47.21
EQUITY
Common Stock		$0.07	$0.06
Capital Surplus		$27.25	$24.31
Retained Earnings		$73.89	$61.10
Less: Treasury Stock		$29.42	$25.71
TOTAL EQUITY		$71.79	$59.77
TOTAL LIABILITIES & EQUITY		$104.47	$106.98
Common Shares Outstanding		$5.14	$5.05
Annual Income Statement
($ Thousands, except per share )
Sales		$179.24	$164.28
Cost of Goods Sold		$95.71	$91.99
Gross Profit		$83.53	$72.29
Selling, General, & Administrative Exp.		$56.36	$50.65
Operating Income Before Deprec.		$27.17	$21.64
Depreciation,Depletion,&Amortization		$5.85	$5.89
Operating Profit		$21.33	$15.74
Interest Expense		$0.88	$0.56
Non-Operating Income/Expense		$0.93	$0.31
Special Items		$0.00	$0.00
Pretax Income		$21.38	$15.49
Total Income Taxes		$7.23	$5.60
Income Before Extraordinary
Items & Discontinued Operations		$14.15	$9.90
Savings Due to Common Stock Equiv.		$0.00	$0.00
Adjusted Net Income		$14.15	$9.90
EPS Basic from Operations		$0.26	$0.19
EPS Diluted from Operations		$0.25	$0.19
Dividends Per Share		$0.02	$0.00
Com Shares for Basic EPS		$5.06	$5.12
Com Shares for Diluted EPS		$5.21	$5.27

Answer 1

			31-Dec-15
Profitability Ratios (in %)	Formula	Calculation	Ratio
Return on equity	Net income / Shareholder equity	=14.15/71.79	19.71%
Return on assets	Net income / Total assets	=14.15/104.47	13.54%
Profit margin	Net income / Sales	=14.15/179.24	7.89%
Gross margin	Gross profit / Sales	=83.53/179.24	46.60%
Turnover-Control Ratios
Asset turnover	Sales / Total assets	=179.24/104.47	1.72
Fixed-asset turnover	Sales / Fixed assets	=179.24/27.58	6.50
Inventory turnover	Sales / Inventory	=179.24/42.72	4.20
Collection period (days)	365/ (Sales / Receivable)	=365/(179.24/1.62)	3.30
Payables period	365/ (COGS / Payable)	=365/(95.71/10.59)	40.39
Leverage and Liquidity Ratios
Assets to equity	Total assets / Equity	=104.47/71.79	1.46
Debt to assets	(Long term debt + Short term debt) / Total assets	=6.95/104.47	0.07
Debt to equity	(Long term debt + Short term debt) / Equity	=6.95/71.79	0.10
Times interest earned	Operating profit / Interest expense	=21.33/0.88	24.24
Current ratio	Current assets / Current liabilities	=64.84/21.54	3.01
Acid test	(Current assets - Inventory)/ Current liabilities	=(64.84-42.72)/21.54	1.03