Question

Given the financial statements for Jones Corporation and Smith Corporation:  

JONES CORPORATION
Current Assets					Liabilities
Cash			$	25,900	Accounts payable	$	149,000
Accounts receivable				81,500	Bonds payable (long term)		80,300
Inventory				51,800
Long-Term Assets					Stockholders' Equity
Gross fixed assets	$	514,000			Common stock	$	150,000
Less: Accumulated depreciation		155,900			Paid-in capital		70,000
Net fixed assets*				358,100	Retained earnings		68,000
Total assets			$	517,300	Total liabilities and equity	$	517,300

    

Sales (on credit)	$	1,347,000
Cost of goods sold		790,000
Gross profit	$	557,000
Selling and administrative expense†		337,000
Depreciation expense		51,600
Operating profit	$	168,400
Interest expense		16,500
Earnings before taxes	$	151,900
Tax expense		102,400
Net income	$	49,500

*Use net fixed assets in computing fixed asset turnover.
†Includes $15,400 in lease payments.
  

SMITH CORPORATION
Current Assets					Liabilities
Cash			$	39,100	Accounts payable	$	80,300
Marketable securities				17,400	Bonds payable (long term)		217,000
Accounts receivable				73,800
Inventory				75,100
Long-Term Assets					Stockholders' Equity
Gross fixed assets	$	509,000			Common stock	$	75,000
Less: Accumulated depreciation		254,200			Paid-in capital		30,000
Net fixed assets*				254,800	Retained earnings		57,900
Total assets			$	460,200	Total liabilities and equity	$	460,200

*Use net fixed assets in computing fixed asset turnover.

   

SMITH CORPORATION
Sales (on credit)	$	1,090,000
Cost of goods sold		658,000
Gross profit	$	432,000
Selling and administrative expense†		256,000
Depreciation expense		56,600
Operating profit	$	119,400
Interest expense		24,100
Earnings before taxes	$	95,300
Tax expense		59,100
Net income	$	36,200

^†Includes $15,400 in lease payments.
  
a. Compute the following ratios. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.)

  
a. Compute the following ratios. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.)

	Jones Corp.	Smith Corp
Profit Margin
Return on assets
Return on equity
Receivable turnover
Average collection period
Inventory turnover
Fixed asset turnover
Total asset turnover
Current ratio
Quick ratio
Debt to total assets
Times interest earned
Fixed charge coverage

Answer 1

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