Basic Financial Ratios
The accounting staff of CCB Enterprises has completed the financial statements for the 2014 calendar year. The statement of income for the current year and the comparative statements of financial position for 2014 and 2013 follow.
| CCB Enterprises |
| Statement of Income |
| For the Year Ended December 31, 2014 |
| (thousands omitted) |
| Revenue: |
|
| Net sales |
$804,100 |
| Other |
61,820 |
| Total revenue |
$865,920 |
| Expenses: |
|
| Cost of goods sold |
$530,260 |
| Research and development |
24,440 |
| Selling and administrative |
155,840 |
| Interest |
19,800 |
| Total expenses |
$730,340 |
| Income before income taxes |
$135,580 |
| Income taxes |
54,232 |
| Net income |
$81,348 |
| CCB Enterprises |
| Comparative Statements of Financial Position |
| December 31, 2014 and 2013 |
| (thousands omitted) |
|
2014 |
2013 |
| Assets |
|
|
| Current assets: |
|
|
| Cash and short-term investments |
$26,050 |
$21,220 |
| Receivables, less allowance for doubtful accounts |
|
|
| ($1,070 in 2014 and $1,370 in 2013) |
48,280 |
49,900 |
| Inventories, at lower of FIFO cost or market |
64,850 |
61,860 |
| Prepaid items and other current assets |
5,290 |
3,060 |
| Total current assets |
$144,470 |
$136,040 |
| Other assets: |
|
|
| Investments, at cost |
$106,020 |
$106,020 |
| Deposits |
10,120 |
7,790 |
| Total other assets |
$116,140 |
$113,810 |
| Property, plant, and equipment: |
|
|
| Land |
$12,050 |
$12,050 |
| Buildings and equipment, less accumulated depreciation |
|
|
| ($125,890 in 2014 and $122,160 in 2013) |
267,410 |
248,300 |
| Total property, plant, and equipment |
$279,460 |
$260,350 |
| Total assets |
$540,070 |
$510,200 |
| Liabilities and Owners' Equity |
|
|
| Current liabilities: |
|
|
| Short-term loans |
$22,270 |
$24,250 |
| Accounts payable |
72,200 |
70,940 |
| Salaries, wages, and other |
26,150 |
27,300 |
| Total current liabilities |
$120,620 |
$122,490 |
| Long-term debt |
$160,570 |
$171,000 |
| Total liabilities |
$281,190 |
$293,490 |
| Owners' equity: |
|
|
| Common stock, at par |
$44,230 |
$42,290 |
| Paid-in capital in excess of par |
64,140 |
61,190 |
| Total paid-in capital |
$108,370 |
$103,480 |
| Retained earnings |
150,510 |
113,230 |
| Total owners' equity |
$258,880 |
$216,710 |
| Total liabilities and owners' equity |
$540,070 |
$510,200 |
Required:
1. Calculate the following financial ratios for 2014 for CCB Enterprises:
Round items h, j, and k to the nearest whole number. Round all other answers to two decimal places. Assume a 360-day year.
a. Times interest earned to 1
b. Return on total assets %
c. Return on common stockholders' equity %
d. Debt-to-equity ratio (at December 31, 2014) to 1
e. Current ratio (at December 31, 2014) to 1
f. Quick (acid-test) ratio (at December 31, 2014) to 1
g. Accounts receivable turnover ratio (Assume that all sales are on credit.) times
h. Number of days' sales in receivables days
i. Inventory turnover ratio (Assume that all purchases are on credit.) times
j. Number of days' sales in inventory days
k. Number of days in cash operating cycle