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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.

SIMMONS MAINTENANCE COMPANY

Balance Sheet

Assets

 

Liabilities

 

Cash

mce_markernbsp;  15,000

Accounts Payable

$

 

 

 

21,000

Accts. Receivable

22,000

Notes Payable

20,000

Inventory

30,000

Accrued Expenses

 

 

 

 

5,000

Current Assets

67,000

Current Liabilities

46,000

Net Fixed Assets

73,000

Long-term Debt

30,000

 

 

Stockholders' Equity

 

 

 

 

64,000

Total Assets

$140,000

Total Liabilities & Stockholders

$140,00

 

 

Equity

0

 

Income Statement

Sales (80% credit)

 

$120,000

Less: Cost of Goods Sold

 

     45,000

Gross Profit

 

75,000

Selling and Administrative Expense

20,000

 

Rent Expense (Lease)

   8,000

      28,000

EBIT

 

47,000

Interest Expense

 

        5,000

Earnings before taxes

 

42,000

Taxes (@ 25%)

 

       10,500

Net Income

 

mce_markernbsp;  31,500

Common shares outstanding

 

15,000

EPS

 

mce_markernbsp;      2.10

 

 

Ratio

 

Simmons

 

Industry

Better (B) or

Worse (W)

 

 

 

 

Profit margin

_________________

17.5%

__________________

Return on assets

_________________

20.8%

__________________

Return on equity

__________________

35%

__________________

Receivables turnover

__________________

4.4x

__________________

Avg. collection period

__________________

68.0 days

__________________

Inventory turnover

__________________

3.5x

__________________

Fixed asset turnover

__________________

2.4x

__________________

Total asset turnover

__________________

.76x

__________________

Current ratio

__________________

1.28

__________________

Quick ratio

__________________

.85

__________________

Debt to total assets

__________________

.45

__________________

Times interest earned

__________________

12.0x

__________________

Fixed charge coverage

__________________

3.6x

__________________

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920699

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