Computation of various ratios from the given financial statements.
The condensed financial statements of Westward Corporation for 2006 are presented below.
|
Westward Corporation
|
Westward Corporation
|
|
Balance Sheet
|
Income Statement
|
|
31-Dec-06
|
For the Year Ended December 31, 2006
|
|
Assets
|
|
Revenues
|
2,000,000
|
|
Current assets
|
|
Expenses
|
|
|
Cash and temporary
|
|
Cost of goods sold
|
1,080,000
|
|
investments
|
30,000
|
Selling and administrative
|
|
|
Accounts receivable
|
70,000
|
expenses
|
495,000
|
|
Inventories
|
120,000
|
Interest expense
|
30,000
|
|
Total current assets
|
220,000
|
Total expenses
|
1,605,000
|
|
|
|
Income before income taxes
|
395,000
|
|
equipment (net)
|
780,000
|
Income tax expense
|
140,000
|
|
Total assets
|
1,000,000
|
Net income
|
255,000
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Current liabilities
|
80000
|
|
|
Long-term liabilities
|
300000
|
|
|
Common stockholders' equity
|
620000
|
|
|
|
Total liabilities and
|
|
|
|
stockholders' equity
|
1000000
|
Additional data as of December 31, 2005: Inventory = $100,000; Total assets = $900,000; Common stockholders' equity = $540,000.
Instructions
Compute the following listed ratios for 2006 showing supporting calculations.
(a) Current ratio = __________________________________________________________.
(b) Debt to total assets = _____________________________________________________.
(c) Times interest earned = ___________________________________________________.
(d) Inventory turnover = _____________________________________________________.
(e) Profit margin ratio = ______________________________________________________.
(f) Return on common stockholders' equity = ____________________________________.
(g) Return on assets = _______________________________________________________.