Assignment
1. CVS Stores Inc. has assets of $5,960,000 and turns over its assets 1.9 times per year. Return on assets is 8 percent. What is the firm's profit margin (return on sales)?
2. Diagnostics Corporation of America income statement for 2015 is presented below:
Sales....................................................................................... $2,790,000
Cost of goods sold................................................................. 1,790,000
Gross profit........................................................................... 1,000,000
Selling and administrative expense......................................... 302,000
Operating profit..................................................................... 698,000
Interest expense..................................................................... 54,800
Income before taxes............................................................... 643,200
Taxes (30%)........................................................................... 192,960
Income after taxes.................................................................. $ 450,240
Compute the profit margin for 2015.
3. Orlando Imaging Center Corporation has total assets of $1,500,000 and current assets of $612,000. It turns over its fixed assets three times a year. It has $319,000 of debt. Its return on sales is 8 percent. What is its return on stockholders' equity?
4. The balance sheet for Medical Equipment Inc., is shown next. Sales for the year were $2,400,000, with 90 percent of sales sold on credit.
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Medical Equipment Inc.
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Balance Sheet 200X
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Assets
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Liabilities and Equity
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Cash........................
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$ 60,000
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Accounts payable.................
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$ 220,000
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Accounts receivable......
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240,000
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Accrued taxes.....................
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30,000
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Inventory..................
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350,000
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Bonds payable
(long-term)........................
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150,000
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Plant and equipment......
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410,000
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Common stock....................
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80,000
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Paid-in capital.....................
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200,000
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Retained earnings.................
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380,000
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Total assets............
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$1,060,000
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Total liabilities and equity...
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$1,060,000
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Compute the following ratios:
Current ratio.
Quick ratio.
Debt-to-total-assets ratio.
Asset turnover.
Average collection period.
5. A firm has net income before interest and taxes of $193,000 and interest expense of $28,100.
What is the times-interest-earned ratio?