Consider the following financial data for Nguyen Industries: Statement of Financial Position as of December 31, 2018 Cash$232,500 Accounts payable$86,500Accts. receivable 357,500 Short-term bank note 254,000Inventories 150,500 Accrued wages & taxes 80,000 Total current assets$740,500 Total current liabilities$420,500 Long-term debt 566,000Net fixed assets 774,500 Common equity 528,500Total assets$1,515,000 Total liab. & equity$1,515,000 Profit & Loss Statement for 2018 Industry Average Ratios Net sales$1,894,000 Current ratio1.4×Cost of goods sold 1,382,500 Quick ratio1.0×Gross profit$511,500 Days sales outstanding63 daysOperating expenses 373,000 Inventory turnover9.5× EBIT$138,500 Total asset turnover1.5×Interest expense 64,000 Net profit margin0.9% Pre-tax earnings$74,500 Return on assets1.3%Income taxes (25%) 18,625 Return on equity3.0%Net income$55,875 Debt-to-capital ratio51% Compared to its peers, Nguyen... a.generates less profit per dollar of shareholders' equity. b.generates more sales per dollar of inventory. c.generates more sales per dollar of total assets. d.obtains less of its capital from debt financing. e.is in a relatively weak short-term liquidity position.

The accounting ratios makes the accounting figures or absolute results of the…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider the following financial data for Nguyen Industries:

Statement of Financial Position as of December 31, 2018

Cash	$	232,500	Accounts payable	$	86,500
Accts. receivable		357,500	Short-term bank note		254,000
Inventories		150,500	Accrued wages & taxes		80,000
Total current assets	$	740,500	Total current liabilities	$	420,500
			Long-term debt		566,000
Net fixed assets		774,500	Common equity		528,500
Total assets	$	1,515,000	Total liab. & equity	$	1,515,000

Profit & Loss Statement for 2018		Industry Average Ratios

Net sales	$	1,894,000	Current ratio	1.4×
Cost of goods sold		1,382,500	Quick ratio	1.0×
Gross profit	$	511,500	Days sales outstanding	63 days
Operating expenses		373,000	Inventory turnover	9.5×
EBIT	$	138,500	Total asset turnover	1.5×
Interest expense		64,000	Net profit margin	0.9%
Pre-tax earnings	$	74,500	Return on assets	1.3%
Income taxes (25%)		18,625	Return on equity	3.0%
Net income	$	55,875	Debt-to-capital ratio	51%

Compared to its peers, Nguyen...

	a.	generates less profit per dollar of shareholders' equity.
	b.	generates more sales per dollar of inventory.
	c.	generates more sales per dollar of total assets.
	d.	obtains less of its capital from debt financing.
	e.	is in a relatively weak short-term liquidity position.

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