Problem - Ratios Compared with industry Averages
Because you own the common stock of Phantom Corporation, a paper manufacturer, you decide to analyze the firm's performance for the most recent year. The following data are taken from the firm's latest annual report:
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Dec. 31, 2016
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Dec. 31, 2015
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|
Quick assets
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$700,000
|
$552,000
|
|
Inventory and prepaid expenses
|
372,000
|
312,000
|
|
Other assets
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4,788,000
|
4,200,000
|
|
Total Assets
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$5,860,000
|
$5,064,000
|
|
|
|
|
|
Current liabilities
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$724,000
|
$564,000
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|
10% Bonds payable
|
1,440,000
|
1,440,000
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|
8% Preferred stock, $100 par value
|
480,000
|
480,000
|
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Common stock, $10 par value
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2,700,000
|
2,160,000
|
|
Retained earnings
|
516,000
|
420,000
|
|
Total Liabilities and Stockholders' Equity
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$5,860,000
|
$5,064,000
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For 2016, net sales amount to $11,280,000, net income is $575,000, and preferred stock dividends paid are $42,000.
Required -
Calculate the following ratios for 2016.
1. Return on sales
2. Return on assets
3. Return on common stockholders' equity
4. Quick ratio
5. Current ratio
6. Debt-to-equity ratio