Question

Some recent financial statements for Smolira Golf, Inc., follow.

SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2015 and 2016
	2015				2016					2015				2016
Assets									Liabilities and Owners’ Equity
Current assets									Current liabilities
Cash	$	3,121			$	3,157			Accounts payable	$	2,168			$	2,630
Accounts receivable		4,752				5,751			Notes payable		1,765				2,146
Inventory		12,538				13,752			Other		93				110
Total	$	20,411			$	22,660			Total	$	4,026			$	4,886
									Long-term debt	$	13,100			$	15,860
									Owners’ equity
									Common stock and paid-in surplus	$	39,500			$	39,500
Fixed assets									Accumulated retained earnings		15,669				39,331
Net plant and equipment	$	51,884			$	76,917			Total	$	55,169			$	78,831
Total assets	$	72,295			$	99,577			Total liabilities and owners’ equity	$	72,295			$	99,577

SMOLIRA GOLF, INC. 2016 Income Statement
Sales				$	187,970
Cost of goods sold					126,503
Depreciation					5,303
EBIT				$	56,164
Interest paid					1,400
Taxable income				$	54,764
Taxes					19,167
Net income				$	35,597
Dividends	$	11,935
Retained earnings		23,662

Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate): (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Enter the profitability ratios as a percent.)

		2015			2016
Short-term solvency ratios
a.	Current ratio		times			times
b.	Quick ratio		times			times
c.	Cash ratio		times			times
Asset utilization ratios
d.	Total asset turnover					times
e.	Inventory turnover					times
f.	Receivables turnover					times
Long-term solvency ratios
g.	Total debt ratio		times			times
h.	Debt−equity ratio		times			times
i.	Equity multiplier		times			times
j.	Times interest earned ratio					times
k.	Cash coverage ratio					times
Profitability ratios
l.	Profit margin					%
m.	Return on assets					%
n.	Return on equity					%

PLEASE DO F-N

Answer 1

For 2016:

Receivables Turnover ratio = net credit sales/ average accounts receivable

net credit sales = 187,970

average accounts receivable = (opening accounts receivable + closing accounts receivable)/ 2

= (4752+5751)/2 = 5251.5

Receivables Turnover ratio = 187,970/5251.5 = 35.79

Total debt ratio = total debt/ total assets

Total debt ratio for 2015 = 13,100/ 72,295 = 0.1812 = 18.12%

Total debt ratio for 2016 = 15,860/ 99,577 = 0.1592 = 15.92%

debt equity ratio = total debt/ total equity

debt equity ratio for 2015 = 13,100/ 55,169 = 0.23745 = 23.75%

debt equity ratio for 2016 = 15,860/ 78,831 = 0.20118 = 20.12%

equity multiplier = total assets/ total shareholders equity

equity multiplier for 2015 = 72,295/ 55,169 = 1.31

equity multiplier for 2016 = 99,577/ 78,831 = 1.26

For 2016:

Time interest earned ratio = EBIT/ interest paid = 56,164/ 1,400 = 40.12

cash coverage ratio = (cash + cash equivalents)/ total current liabilities = (3,157 + 5,751)/ 4,886 = 1.82

profit margin = net income/ net sales = 35,597/ 187,970 = 0.18937 = 18.94%

return on assets = net income/ average total assets

average total assets = (72,295 + 99,577)/ 2 = 85,936

return on assets = 35,597/ 85,936 = 0.41422 = 41.42%

return on equity = net income/ average equity

average equity = (55,169 + 78,831)/ 2 = 67,000

return on equity = 35,597/ 67,000 = 0.53129 = 53.13%