The balance sheet and income statement for Chico Electronics are reproduced below (tax rate is 40%).
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CHICO ELECTRONICS
Balance Sheet ($ thousands)
As of December 31
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Assets
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Current assets
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Cash
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$ 683
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$325
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Accounts receivable
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1,490
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3,599
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Inventories
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1,415
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2,423
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Prepaid expenses
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15
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13
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Total current assets
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3,603
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$6,360
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Property, plant and equipment, net
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1,066
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$1,541
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Other assets
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123
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157
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Total assets
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$4,792
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$8,058
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Liabilities and Shareholders" Equity
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Current liabilities
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Notes payable to bank
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$ -
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$875
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Current portion of long-term debt
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38
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$116
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Accounts payable
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485
|
933
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Estimated income tax liability
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588
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472
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Accrued expenses.
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576
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586
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Customer advance payments
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34
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963
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Total current liabilities
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1,721
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$3,945
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Long-term debt
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122
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179
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Other liabilities
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81
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131
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Total liabilities
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1,924
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4,255
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Shareholders" equity
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Common stock, $1.00 par value; 1,000,000 shares authorized;
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550,000 and 829,000 outstanding, respectively
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Preferred stock, Series A 10%; $25 par value; 25,000 authorized
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550
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829
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20,000 and 18,000 outstanding, respectively
|
500
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450
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Additional paid-in capital
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450
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575
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Retained earnings
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1,368
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1,949
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Total shareholders" equity
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2,868
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3,803
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Total liabilities and shareholders" equity
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$4,792
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$8,058
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CHICO ELECTRONICS
Income Statement ($ thousands)
For Years Ending December 31
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Year 4
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Year 5
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Net sales
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7,570
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$12,065
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Other income, net
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$261
|
345
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Total revenues.
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7,831
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12,410
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Cost of goods sold
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4,850
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8048
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General, administrative, and
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1,531
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2025
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marketing expense
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Interest expense
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22
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78
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Total costs and expenses
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6403
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10151
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Net income before tax
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1,428
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2,259
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Income tax
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628
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994
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Net income
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$800
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$1,265
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Required:
Compute and interpret the following financial ratios of the company for Year 5:
a. Acid-test ratio.
b. Return on assets.
c. Return on common equity.
d. Earnings per share.
e. Gross profit margin ratio.
f. Times interest earned.
g. Days to sell inventory.
h. Long-term debt to equity ratio.
i. Total debt to equity.
j. Sales to end-of-year working capital.