Question

SOVO Excel SIM: Selected Financial Ratios 1. Compute and interpret financial ratios that managers use to assess liquidity 2. Compute and interpret financial ratios that managers use for asset management purposes. 3. Compute and interpret financial ratios that managers use for debt management purposes S. FILE HOME INSERT PAGE LAYOUT Selected Financial Ratios - Excel FORMULAS DATA REVIEW 26 ? Caliber x VIEW ! Paste 10 A - 6 Sign in À Alignment Number BIU- B A Coboard Fort Conditional Formatas Cell Formatting Table Styles Cells - Editing C34 Styles s 6 S Assets Current assets Cash Marketable securities Accounts receivable net Inventory Other current assets 12 Total current assets 15 plant and equipment, net 14 Other assets 15 Total sets 16 Lafities and Stockholders' Equity 17 Current Ube Accounts payable Short-term bank loans Accrued pables Other current e s Total current abilities Bonds payable 10 360,000 220,000 775,000 925,000 355.000 2,635,000 1,975.000 75.000 LORS.RO S $4.980,000 2.988 000 1992.000 310,000 Sales (all on account) 30,000 Cost of goods sold 700,000 Gross margin 750,000 Selling and administrative expenses 195,00 Operating expenses 2.035,000 Depreciation and amortization 1.800.000 General and administrative expenses 100.000 Total selling and administrative expenses S D Net Operating income Interest expense Net income before taxes 225,000 income taxes 500.000 Net income 395.000 123.400 Additional information 14,400 Dividend per share paid in current year Margrice of shares atverend 14400 Pare of common stock per share S&S 500 410,500 150 000 1545.000 46.000 $ 50 000 386.000 235 100 250,000 750.000 550.000 275.000 1.825.000 575.000 2.400.000 ockholders' equity 1.150.000 2000 1.150.000 Number of shares outstanding 9016 Attempts) 8/10

Answer 1

Current ratio:
Current asset/current liabilities	2635000/1825000	1.444
Acid test ratio:
(Cash+Marketable securities+accounts receivable)/total current liabilities	(360000+220000+775000)/1825000	0.74
Accounts receivable turnover:
Net credit sales/Average accounts receivable	4980000/737500	6.75
Average accounts receivable	(opening +closing)/2
	(700000+775000)/2
	737500
Note: Assumed total sales as credit sales
Average collection period:
365days/Accounts receivable turnover ratio	365/6.75	54.07
Inventory turnover ratio:
Cost of goods sold/Average inventory	2988000/837500	3.57
Average iventory: (opening+closing)/2	(750000+925000)/2
	837500
Average sales period:
(Average inventory/Cost of sales)*365days	(837500/2988000)*365	102.31
Debt to equity ratio:
Total long term liabilities/Share holder's equity	575000/2285000	0.25
Times interest earned:
Earnings before interest and tax/Total interest expense	446000/60000	7.43
Book value per share:
Share holders equity/total number of outstanding shares	2285000/57500	39.74
Number of shares outstanding : common stock / Par value	1150000/20
	57500
Earnings per share:
Profit after tax/Total shares outstanding	250900/57500	4.36
Dividend payout ratio:
Dividends paid/Net income	57500/250900	0.23
Dividends paid current year 1$ so total 1*57500= 57500
Dividend yeild ratio:
Dividend per share/Market value per share	4.36/42	0.104	or	10.38%
Note: as per my knowledge I assumed left side hand figures are the current year figures and right hand side figures are the previous year figures