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Ratios for Simmons IndustryBetter (B) or worse(W) Ratio Δverage Profit margin Return on assets Return on equity Receivables turnover Avg. collection period Inventory turnover Fixed asset turnover Total asset turnover Current ratio Quick ratio Debt to total assets Times interest earned Fixed charge coverage 17.5% 20.8% 35% 4.4x 68.0 days - 3.5x 2.4x -76x 1.28 .85 .45 12.0x 3.6x
Given the balance sheet and income state for Simmons Maintenance ratios that are also shown for the industry average. For each ratio, in is better or worse than the industry average. For inventory turnov cost of goods sold. 3. Company, com dicate whet er, use sales rathe SIMMONS MAINTENANCE COMPANY Assets Cash Accts. Receivable Inventory Current Assets Net Fixed Assets S 15,000 Accounts Payable S 21,000 22,000 Notes Payable 30,000 Accrued Expenses 67,000 Current Liabilities 20,000 5.000 46,000 30.000 64.000 -73,000 Long-term Debt Stockholders Equity Total Assets $140,000 Total Liabilities & Stockholders Equity $140,000 Income Statement $120,000 Sales (80% credit) Less: Cost of Goods Sold Gross Profit Selling and Administrative Expense Rent Expense (Lcase) EBIT Interest Expense Earnings before taxes Taxes (@ 25%) Net Income 45.000 75,000 20,000 8.000 47,000 42,000 -10S00 S 31.500 15,000 Common shares outstanding EPS S 2.10
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Answer #1
Ratios:
Ratio Formula Calculation Result Industry Avg. Better (B) or Worse (W)
Profit margin NI/Sales 31500/120000 0.26 0.175 B
ROA NI/TA 31500/140000 0.23 0.208 B
ROE NI/Sh. Eq. 31500/64000 0.49 0.35 B
Receivables T/O Sales/Receivables 120000/22000 5.45 4.4 B
Avg. Collection period 365/Rece. T/O 365/5.45 66.97 68 B
Inv. T/O COGS/Inventory 45000/30000 1.50 3.5 W
FA T/O Sales/FA 120000/73000 1.64 2.4 W
TA T/O Sales/TA 120000/140000 0.86 0.76 B
CR CA/CL 67000/46000 1.46 1.28 B
QR CA-Inv. / CL (67000-30000)/46000 0.80 0.85 W
Debt to TA Debt/TA (46000+30000)/140000 0.54 0.45 W
Times Interest earned EBIT/Interest exp 47000/5000 9.40 12 W
Fixed Charge coverage Operating Income/Fixed exp 75000/(20000+8000) 2.68 3.6 W
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