Q1) Following are selected data from comparative income statement and balance sheet for Deerfield Corporation for years ended December 31, 20X8 and 20X7:
Selected Data
| |
20X8 |
20X7 |
| Net sales (all on credit) |
$97,600 |
$93,000 |
| Cost of goods sold |
53,500 |
52,500 |
| Gross profit |
44,700 |
40,500 |
| Income from operations |
16,300 |
15,000 |
| Interest expense |
3,100 |
3,500 |
| Net income |
9,800 |
9,000 |
| Cash |
7,700 |
7,500 |
| Accounts receivable, net |
10,700 |
12,500 |
| Inventory |
20,000 |
26,000 |
| Prepaid expenses |
1,000 |
900 |
| Total current assets |
39,400 |
46,900 |
| Total long-term assets |
50,000 |
67,000 |
| Total current liabilities |
32,000 |
44,500 |
| Total long-term liabilities |
11,000 |
39,800 |
| Common stock, no par |
*10,000 |
10,000 |
| Retained earnings |
25,400 |
19,600 |
NOTE: 2000 shares of common stock have been issued and outstanding since company started operations. During entire fiscal year ended December 31, 20X8, stock was selling for $45 per share.
Compute the following ratios at December 31, 20X8:
a) Acid-test ratio
b) Rate of return on total assets
c) Times-interest-earned ratio
d) Current ratio