problem: Given the balance sheet & income statement for Simmons Maintenance Company, find out the ratios requested below & indicate whether each is better or worse than the industry average.
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SIMMONS MAINTENANCE COMPANY
Balance Sheet
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Assets
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Liabilities
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Cash
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mce_markernbsp; 15,000
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Accounts Payable
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$
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21,000
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Accts. Receivable
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22,000
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Notes Payable
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20,000
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Inventory
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30,000
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Accrued Expenses
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5,000
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Current Assets
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67,000
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Current Liabilities
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46,000
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Net Fixed Assets
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73,000
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Long-term Debt
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30,000
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Stockholders' Equity
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64,000
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Total Assets
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$140,000
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Total Liabilities & Stockholders
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$140,00
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Equity
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0
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Income Statement
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Sales (80% credit)
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$120,000
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Less: Cost of Goods Sold
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45,000
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Gross Profit
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75,000
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Selling and Administrative Expense
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20,000
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Rent Expense (Lease)
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8,000
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28,000
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EBIT
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47,000
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Interest Expense
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5,000
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Earnings before taxes
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42,000
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Taxes (@ 25%)
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10,500
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Net Income
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mce_markernbsp; 31,500
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Common shares outstanding
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15,000
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EPS
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mce_markernbsp; 2.10
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Ratio
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Simmons
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Industry
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Better (B) or
Worse (W)
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Profit margin
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_________________
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17.5%
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__________________
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Return on assets
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_________________
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20.8%
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__________________
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Return on equity
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__________________
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35%
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__________________
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Receivables turnover
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__________________
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4.4x
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__________________
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Avg. collection period
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__________________
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68.0 days
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__________________
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Inventory turnover
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__________________
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3.5x
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__________________
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Fixed asset turnover
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__________________
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2.4x
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__________________
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Total asset turnover
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__________________
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.76x
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__________________
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Current ratio
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__________________
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1.28
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__________________
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Quick ratio
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__________________
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.85
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__________________
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Debt to total assets
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__________________
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.45
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__________________
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Times interest earned
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__________________
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12.0x
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__________________
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Fixed charge coverage
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__________________
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3.6x
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__________________
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