From the following information, compute the ratios indicated. Assume the average for the year is the same as the ending balances for the balance sheet accounts. Round percentages to one decimal place. Show your work.
Balboa Corporation
Balance Sheet
December 31, 2004
Assets
Cash $ 15,000
Marketable securities 10,000
Accounts receivable (net) 20,000
Inventory 30,000
Prepaid expenses 8,000
Property, plant, and equipment 117,000
Total assets $200,000
Liabilities and Stockholders' Equity
Current liabilities $ 30,000
Long-term liabilities 50,000
Stockholders' equity 120,000
Total liabilities and stockholders' equity $200,000
Balboa Corporation
Income Statement
For the Year Ended December 31, 2004
Net sales $160,000
Cost of goods sold 120,000
Gross margin $ 40,000
Expenses
Selling & administrative expenses $16,000
Interest expense 8,000 24,000
Income before income taxes $ 16,000
Income taxes &nbsõbpx.øi5bsp; 4,000
Net income $ 12,000
Balboa had 4,000 shares of common stock issued and outstanding. The market price of common stock at year end was $15 per share. Dividends paid in 2004 were $.60 per share.
Calculate the following ratios:
- Current ratio 6. Asset turnover
- Quick ratio 7. Return on assets
- Receivable turnover 8. Return on equity
- Inventory turnover 9. Debt to equity ratio
- Profit margin