Question

Consider the following comparative income statement and additional balance sheet data for Classic Fashions, Inc.

Classic Fashions, Inc.
Income Statement
Years Ended December 31, 2018 and 2017
			2018	2017
		Net sales	$243,000	$314,000
		Cost of goods sold	130,000	145,000
		Gross profit	113,000	169,000
		Selling and general expenses	62,000	64,000
		Income from operations	51,000	105,000
		Interest expense	3,400	3,600
		Income before income tax	47,600	101,400
		Income tax expense	6,000	9,000
		Net income	$41,600	$92,400

	2018	2017	2016
Accounts receivable. . . . . . . . . . . . . . . . .	26,000	24,000	24,000
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . .	14,000	19,600	16,700
Total current assets. . . . . . . . . . . . . . . . . .	42,000	45,600	46,200
Fixed assets. . . . . . . . . . . . . . . . . . . . . . .	251,200	242,500	195,000
Total assets. . . . . . . . . . . . . . . . . . . . . . . .	$293,200	$288,100	$241,200

1.	For 2017 and 2018 compute the five ratios that measure how a business is investing its money and whether it is using its assets efficiently. Round each ratio to two decimal places. Assume all sales are on credit.
2.	Did the company's performance improve or deteriorate during 2018?

For 2017 and 2018 ,

compute the five ratios that measure how a business is investing its money and whether it is using its assets efficiently. Round each ratio to two decimal places. Assume all sales are on credit.Select the five ratios used to measure how a company is investing its money and whether it is using its assets efficiently, select the corresponding formulas, and then calculate each ratio for 2017 and 2018.

(Enter the first four ratios as decimals rounded to two decimal places, X.XX, and the last ratio as a percentage to the nearest hundredth percent, X.XX%. Abbreviations used: EPS = Earnings per share, ROA = Return on assets, ROE = Return on equity, ROS = Return on sales.)

Ratio	Formula	2018		2017
			%		%

Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

a)
Ratio	Formula	2018	2017
Accounts Receivable Turnover	Net sales/Average Accounts Receivables	9.7200	13.0833
Inventory Turnover	Cost of Good Sold/ Average Inventory	7.7381	7.9890
Assets Turnover	Net sales/Average Total Assets	0.8361	1.1865
Fixed Assets Turnover	Net sales/Average Fixed Assets	0.9844	1.4354
Return on Assets	Net Income/ Average Total Assets	14.31%	34.91%
b) The company's performance has deteriorate during 2018.