Question

Starbuch Coffee Company Comparative Balance Sheet (Dollars in Thousands) End of year Beginning Year 4.) Current Assets Cauh.... Market securities Accounts receivable. Inventories .......... Other current assets $126,215 103,221 17,621 83,370 9.114 $20,944 41,507 9,852 123,657 9,390 339,541 369,477 17.593 $ 726,613 205,350 244,728 18.100 $ 468,178 Total current assets..... Property and equipment net Other assets ...... Total assets Liabilities and stockholders' Equity Current liabilities: Accounts payable ....... Short-term bank loans .. Accrued payables ...... Other current liabilities Total - current liabilities .. Long term liabilities: Bonds payable Other long-term liabilities Total liabilities Stockholders' equity: Preferred stock Common stock and additional paid-in capital... Retained earnings.... Total Stockholders' equity ....... Total Liabilities and stockholders' equity. $38,034 16,241 18,005 28,811 $101,091 $28,668 13,138 13,436 15,804 $71,046 165,020 8.842 274.953 80,398 4,503 155.947 361, 309 0 265,679 90,351 451.660 $ 726,613 46,552 312.231 $ 468.178 Note: The effective interest rate on the bonds payable was about 5%

Answer 1

1. Return on total assets = Net income / Avg total assets = 42128 / [ (726613+468178)/2] = 7.05%

2. Return on common stockholders equity = Net Income / Avg stockholders equity = 42128/ [(451660+312231)/2] = 11.03%

3. Current ratio = Current assets / Current liabilities = 339541/101091 =3.36

4. Acid test ratio =    Current assets- Inventories / Current liabilities = (339541 - 83370) /101091 = 2.53

5. Inventory turnover ratio = Cost of goods sold / Avg inventories = 335800 / [(83370+123657)/2] = 3.24 times

6. Average sale period = 365 / Inventory turnover ratio = 365/ 3.24 = 112.51 days

7. Debt equity ratio = Total liabilities / Stockholders equity = 274953/ 451660 =0.609