1. Use the following information for questions A & B below
Elton Corporation
Income Statement
for the year ending 12/31/XX
(in thousands of dollars)
Net sales $ 2,700
Operating Costs (2,350)
Depreciation ( 150)
Interest Expense ( 70)
EBT 130
Income Tax (40%) (52)
Net Income $ 78
Dividends to Common Stock = $ 58
Elton Corporation
Balance Sheet
12/31/XX
(in thousands of dollars)
Cash $ 150 Accounts Payable $100
Accounts Receivable 250 Notes Payable 250
Inventory 600 Other Current Liabilities 50
Total Current Assets $1,000 Total Current Liabilities $400
Total Fixed Assets 1,500 Long Term Debt 1,100
Common Stock 800
Retained Earnings 200
Total Assets $2,500 Total Liab. & Equity $2,500
Number of shares outstanding = 10,000 shares
Price per Share = $100
A. Calculate each of the following ratios. Be sure to give the complete equation as well as the solution:
a. Current ratio
b. Quick ratio
c. Total Debt/Total Asset Ratio
d. Inventory Turnover Ratio
e. ROE
f. TIE
g. EPS
h. Net Profit Margin
i. Market to Book Ratio
j. Total Assets Turnover Ratio
B. Given the following benchmarks for this company's industry
Current Ratio 3.5
Inventory turnover ratio 3
Net profit margin 2
Times interest earned 1.5
Explain what each benchmark ratio is telling us about how this company is doing compared to the industry.