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BUSI 320 Comprehensive Problem 1 Version FALL Use the following information to answer the questions below: note: all sales are credit sales Income Stmt info: Sales $ less Cost of Goods Sold: Gross Profit Operating Expenses Earnings before Interest & Taxes Interest exp earnings before Taxes Taxes Net Income $ 2019 800,000 $ 220.000 580,000 480.000 100,000 25,000 75,000 25.000 50,000 $ 2020 880,000 240.000 640,000 505.000 135,000 25.000 110,000 30.000 80,000 Balance Sheet info: Cash Accounts Receivable Inventory Total Current Assets Fixed Assets (Net) Total Assets 12/31/19 60,000 $ 90,000 $ 110.000 $ 260,000 $ 300.000 $ 560,000 $ 12/31/20 65,000 95,000 130.000 290,000 330.000 620,000 $ S $ Current Liabilities Long Term Liabilities Total Liabilities Stockholder's Equity Total Liab & Equity: $ $ $ 130,000 $ 170.000 S 300,000 $ 260.000 S 560.000 140,000 200.000 340,000 280,000 620.000 S S Compute each of the following ratios for 2019 and 2020 and indicate whether each ratio was getting "better" or "worse" from 2019 to 2020 and whether the 2020 ratio was "good" or "bad" compared to the Industry Avg (round all numbers to 2 digits past the decimal place) Getting Better or Getting Worse? "Good" or "Bad" 2020 compared Industry to Industry Avg Avg 0.08 2019 2020 Profit Mangin

Answer 1

2 Getting better or 2020 Worse 2020 Industry Good or bad Avg as compared to ind. Avg. 3 4 5 6 Better 0.08 good 7 8 9 2019 HERE NET SALES IS 880,000 NET INCOME IS 80,000 PROFIT MARGIN=80,000/880,000=0.09 Here, CA = $ 290,000 CL= $ 140,000 Current ratio= 290000/140000=2.07:1 Here, LA = $ 290,000-130,000=160,000 CL= $ 140,000 Quick ratio= 160000/140000=1.14:1 80000/6200000 =0.12 = 200,000/6200000=0.32 95,000/880,000=0.10 Better 1.8 good 10 11 12 13 RATIO 1 1 PROFIT MARGIN = NET INCOME/NET SALES *100 HERE NET SALES IS 800,000 NET INCOME IS $50,000 PROFIT MARGIN =50,000/800,000 =0.06 2 Current ratioo= current assets/ current liabilities Here, CA = $260,000 CL= $130,000 Current ratio= 260000/130000=2:1 3 Quick ratio = Liquid assets/current liab. Here, LA = $260,000 -110,000=$150,000 Liquid assets Current assets - inventory CL= $130,000 Quick ratio ratio= 150000/130000=1.15:1 4 Return on Aseets = Net income / Total assets 50000/560000=0.08 5 Debt to assets ratio= Debts / assets 170000/5600000=0.30 6 Receivable turnover ratio 90000/800,000=0.112 = Account recevable / credit sales 7 Av collection period = 90000/800,000*360=41 days = Account recevable / credit sales *360 8 Inventtory turover ratio 11000/220000=0.50 Inventory / cost of goods sold Inventory/sales 110000/8000000=0.125 9 Return on equity Net income /Equity 50000/2600000=0.19 10 Time interest earned 100000/25000=4 EBIT/ Interest expenses Worse better Worse Better 1.12 good 0.18 bad 0.6 bad 12 bad 14 15 16 17 95,000/880,000*360=36 days Worse 22.1 good 18 19 130000/24000=0.54 Better 8.25 bad 20 21 130000/88000=0.147 Better 22 23 80000/280000=0.28 135000/25000=5.4 Better Better 0.16 good 8.15 bad 24 25 26 27 NOTE - PLEASE UPVOTE IT SHALL BE A GREAT FAVOR THANKS 28 29 30 31 32 33 34