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Use the attached information to complete the ratio analysis.  The Ratio Analysis is for Liquidity, Solvency and Profitability

Use the attached information to complete the ratio analysis.  The Ratio Analysis is for Liquidity, Solvency and Profitability

FINANCIAL ACCOUNTING
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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Use the attached information to complete the ratio analysis.  The Ratio Analysis is for Liquidity, Solvency and Profitability

**Ratio Analysis** ### Liquidity 1. **Working Capital** - **Formula/Calculation:** Current Assets - Current Liabilities - **Graph/Diagram Description:** N/A 2. **Current Ratio** - **Formula/Calculation:** Current Assets / Current Liabilities - **Graph/Diagram Description:** N/A 3. **Quick Ratio** - **Formula/Calculation:** (Current Assets - Inventory) / Current Liabilities - **Graph/Diagram Description:** N/A 4. **Inventory Turnover** - **Formula/Calculation:** Cost of Goods Sold / Average Inventory - **Graph/Diagram Description:** N/A 5. **Average Days to Sell Inventory** - **Formula/Calculation:** 365 / Inventory Turnover - **Graph/Diagram Description:** N/A ### Solvency 1. **Debt to Assets** - **Formula/Calculation:** Total Liabilities / Total Assets - **Graph/Diagram Description:** N/A 2. **Debt to Equity** - **Formula/Calculation:** Total Liabilities / Total Equity - **Graph/Diagram Description:** N/A 3. **Number of Times Interest is Earned** - **Formula/Calculation:** EBIT / Interest Expense - **Graph/Diagram Description:** N/A 4. **Plant Assets to Long-term Liabilities** - **Formula/Calculation:** Net Plant Assets / Long-term Liabilities (Debt and Borrowings Only) - **Graph/Diagram Description:** N/A ### Profitability 1. **Net Margin (Return on Sales)** - **Formula/Calculation:** Net Income / Net Sales**(For Net Sales Use Sales Only, Do Not Include Other Revenue) - **Graph/Diagram Description:** N/A 2. **Asset Turnover** - **Formula/Calculation:** Net Sales (Same as Above) / Average Total Assets - **Graph/Diagram Description:** N/A 3. **Return on Investment** - **Formula/Calculation:** Net Income / Average Total Assets - **Graph/Diagram Description:** N/A 4. **Return on Equity** - **Formula/Calculation:** Net Income / Average Total Stockholders' Equity - **Graph/Diagram Description:** N/A 5. **Earnings Per Share** - **Formula/Calculation:** Net Earnings Available for Common Stock / Average Number
Transcribed Image Text:**Ratio Analysis** ### Liquidity 1. **Working Capital** - **Formula/Calculation:** Current Assets - Current Liabilities - **Graph/Diagram Description:** N/A 2. **Current Ratio** - **Formula/Calculation:** Current Assets / Current Liabilities - **Graph/Diagram Description:** N/A 3. **Quick Ratio** - **Formula/Calculation:** (Current Assets - Inventory) / Current Liabilities - **Graph/Diagram Description:** N/A 4. **Inventory Turnover** - **Formula/Calculation:** Cost of Goods Sold / Average Inventory - **Graph/Diagram Description:** N/A 5. **Average Days to Sell Inventory** - **Formula/Calculation:** 365 / Inventory Turnover - **Graph/Diagram Description:** N/A ### Solvency 1. **Debt to Assets** - **Formula/Calculation:** Total Liabilities / Total Assets - **Graph/Diagram Description:** N/A 2. **Debt to Equity** - **Formula/Calculation:** Total Liabilities / Total Equity - **Graph/Diagram Description:** N/A 3. **Number of Times Interest is Earned** - **Formula/Calculation:** EBIT / Interest Expense - **Graph/Diagram Description:** N/A 4. **Plant Assets to Long-term Liabilities** - **Formula/Calculation:** Net Plant Assets / Long-term Liabilities (Debt and Borrowings Only) - **Graph/Diagram Description:** N/A ### Profitability 1. **Net Margin (Return on Sales)** - **Formula/Calculation:** Net Income / Net Sales**(For Net Sales Use Sales Only, Do Not Include Other Revenue) - **Graph/Diagram Description:** N/A 2. **Asset Turnover** - **Formula/Calculation:** Net Sales (Same as Above) / Average Total Assets - **Graph/Diagram Description:** N/A 3. **Return on Investment** - **Formula/Calculation:** Net Income / Average Total Assets - **Graph/Diagram Description:** N/A 4. **Return on Equity** - **Formula/Calculation:** Net Income / Average Total Stockholders' Equity - **Graph/Diagram Description:** N/A 5. **Earnings Per Share** - **Formula/Calculation:** Net Earnings Available for Common Stock / Average Number
**Financial Data for Ratio Analysis** Use the following information to complete the ratio analysis for liquidity, solvency, and profitability. ### Data Overview #### FY 2018 vs. FY 2017 --- **ASSETS** - **Cash and Cash Equivalents**: - FY 2018: $1,556 - FY 2017: $2,643 - **Inventory**: - FY 2018: $9,497 - FY 2017: $8,597 - **Other Current Assets**: - FY 2018: $1,466 - FY 2017: $1,300 - **Total Current Assets**: - FY 2018: $12,519 - FY 2017: $12,540 - **Property and Equipment**: - **Land**: - FY 2018: $6,064 - FY 2017: $6,095 - **Buildings and Equipment**: - FY 2018: $29,240 - FY 2017: $28,131 - **Fixtures and Equipment**: - FY 2018: $5,219 - FY 2017: $5,621 - **Computer Hardware and Software**: - FY 2018: $2,544 - FY 2017: $2,464 - **Construction-in-Progress**: - FY 2018: $460 - FY 2017: $440 - **Accumulated Depreciation**: - FY 2018: $(18,657) - FY 2017: $(18,398) - **Property and Equipment, Net**: - FY 2018: $25,533 - FY 2017: $24,536 - **Operating Lease Assets**: - FY 2018: $1,965 - FY 2017: $1,884 - **Other Noncurrent Assets**: - FY 2018: $1,273 - FY 2017: $1,343 - **TOTAL ASSETS**: - FY 2018: $41,290 (100.00%) - FY
Transcribed Image Text:**Financial Data for Ratio Analysis** Use the following information to complete the ratio analysis for liquidity, solvency, and profitability. ### Data Overview #### FY 2018 vs. FY 2017 --- **ASSETS** - **Cash and Cash Equivalents**: - FY 2018: $1,556 - FY 2017: $2,643 - **Inventory**: - FY 2018: $9,497 - FY 2017: $8,597 - **Other Current Assets**: - FY 2018: $1,466 - FY 2017: $1,300 - **Total Current Assets**: - FY 2018: $12,519 - FY 2017: $12,540 - **Property and Equipment**: - **Land**: - FY 2018: $6,064 - FY 2017: $6,095 - **Buildings and Equipment**: - FY 2018: $29,240 - FY 2017: $28,131 - **Fixtures and Equipment**: - FY 2018: $5,219 - FY 2017: $5,621 - **Computer Hardware and Software**: - FY 2018: $2,544 - FY 2017: $2,464 - **Construction-in-Progress**: - FY 2018: $460 - FY 2017: $440 - **Accumulated Depreciation**: - FY 2018: $(18,657) - FY 2017: $(18,398) - **Property and Equipment, Net**: - FY 2018: $25,533 - FY 2017: $24,536 - **Operating Lease Assets**: - FY 2018: $1,965 - FY 2017: $1,884 - **Other Noncurrent Assets**: - FY 2018: $1,273 - FY 2017: $1,343 - **TOTAL ASSETS**: - FY 2018: $41,290 (100.00%) - FY
Expert Solution
Step 1 Overview

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by studying its financial statements such as the balance sheet and income statement.

Ratio analysis can mark how a company is performing over time, while comparing a company to another within the same industry or sector.

Ratio analysis helps business to know the financial position of it using the interpretation of the ratios. Accordingly, the management can use these ratios in decision making process.

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