SMOLIRA GOLF. INC. 2016 Income Statement Sales $205,227 Cost of goods sold 138,383 Depreciation 5,910 EBIT $ 60,934 Interest paid 1,617 Taxable income $ 59,317 Taxes 20,760 Net income $ 38,557 Dividends $14,300 Additions to retained earnings 24,257 Calculating Financial Ratios . Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate): Short-term solvency ratios a. Current ratio ___ b. Quick ratio _ c. Cash ratio _ Asset utilization ratios d. Total asset turnover _ e. Inventory turnover _ f . Receivables turnover _ Long-term solvency ratios g. Total debt ratio _ h. Debt–equity ratio _ i. Equity multiplier _ j. Times interest earned ratio _ k. Cash coverage ratio _ Profitability ratios l . Profit margin _ m. Return on assets _ n . Return on equity ___

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Textbook Question

Chapter 3, Problem 35QP

Chapter 3, Problem 35QP, SMOLIRA GOLF. INC. 2016 Income Statement Sales 205,227 Cost of goods sold 138,383 <x-custom-btb-me data-me-id='391' class='microExplainerHighlight'>Depreciation</x-custom-btb-me> 5,910

SMOLIRA GOLF. INC. 2016 Income Statement
Sales	$205,227
Cost of goods sold	138,383
Depreciation	5,910
EBIT	$ 60,934
Interest paid	1,617
Taxable income	$ 59,317
Taxes	20,760
Net income	$ 38,557
Dividends	$14,300
Additions to retained earnings	24,257

Calculating Financial Ratios. Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate):

Short-term solvency ratios

a. Current ratio _____

b. Quick ratio _____

c. Cash ratio _____

Asset utilization ratios

d. Total asset turnover _____

e. Inventory turnover _____

f. Receivables turnover _____

Long-term solvency ratios

g. Total debt ratio _____

h. Debt–equity ratio _____

i. Equity multiplier _____

j. Times interest earned ratio _____

k. Cash coverage ratio _____

Profitability ratios

l. Profit margin _____

m. Return on assets _____

n. Return on equity _____

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

a)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

b)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

c)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

d)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

e)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

f)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

g)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

h)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

i)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

j)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

k)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

l)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

m)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

n)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formulae to calculate the Return on equity (ROE):

ROE=Net incomeTotal equity

Compute the Return on equity (ROE):

ROE=Net incomeTotal equity=$38,557$82,792=0.4657

Hence, the return on equity is 0.4657 or 46.57%.

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Answer 2

Textbook Question

Chapter 3, Problem 35QP

Chapter 3, Problem 35QP, SMOLIRA GOLF. INC. 2016 Income Statement Sales 205,227 Cost of goods sold 138,383 <x-custom-btb-me data-me-id='391' class='microExplainerHighlight'>Depreciation</x-custom-btb-me> 5,910

SMOLIRA GOLF. INC. 2016 Income Statement
Sales	$205,227
Cost of goods sold	138,383
Depreciation	5,910
EBIT	$ 60,934
Interest paid	1,617
Taxable income	$ 59,317
Taxes	20,760
Net income	$ 38,557
Dividends	$14,300
Additions to retained earnings	24,257

Calculating Financial Ratios. Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate):

Short-term solvency ratios

a. Current ratio _____

b. Quick ratio _____

c. Cash ratio _____

Asset utilization ratios

d. Total asset turnover _____

e. Inventory turnover _____

f. Receivables turnover _____

Long-term solvency ratios

g. Total debt ratio _____

h. Debt–equity ratio _____

i. Equity multiplier _____

j. Times interest earned ratio _____

k. Cash coverage ratio _____

Profitability ratios

l. Profit margin _____

m. Return on assets _____

n. Return on equity _____

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

a)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

b)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

c)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

d)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

e)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

f)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

g)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

h)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

i)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

j)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

k)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

l)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

m)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

n)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formulae to calculate the Return on equity (ROE):

ROE=Net incomeTotal equity

Compute the Return on equity (ROE):

ROE=Net incomeTotal equity=$38,557$82,792=0.4657

Hence, the return on equity is 0.4657 or 46.57%.

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Answer 3

Textbook Question

Chapter 3, Problem 35QP

Chapter 3, Problem 35QP, SMOLIRA GOLF. INC. 2016 Income Statement Sales 205,227 Cost of goods sold 138,383 <x-custom-btb-me data-me-id='391' class='microExplainerHighlight'>Depreciation</x-custom-btb-me> 5,910

SMOLIRA GOLF. INC. 2016 Income Statement
Sales	$205,227
Cost of goods sold	138,383
Depreciation	5,910
EBIT	$ 60,934
Interest paid	1,617
Taxable income	$ 59,317
Taxes	20,760
Net income	$ 38,557
Dividends	$14,300
Additions to retained earnings	24,257

Calculating Financial Ratios. Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate):

Short-term solvency ratios

a. Current ratio _____

b. Quick ratio _____

c. Cash ratio _____

Asset utilization ratios

d. Total asset turnover _____

e. Inventory turnover _____

f. Receivables turnover _____

Long-term solvency ratios

g. Total debt ratio _____

h. Debt–equity ratio _____

i. Equity multiplier _____

j. Times interest earned ratio _____

k. Cash coverage ratio _____

Profitability ratios

l. Profit margin _____

m. Return on assets _____

n. Return on equity _____

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

a)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

b)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

c)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

d)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

e)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

f)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

g)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

h)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

i)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

j)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

k)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

l)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

m)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

n)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formulae to calculate the Return on equity (ROE):

ROE=Net incomeTotal equity

Compute the Return on equity (ROE):

ROE=Net incomeTotal equity=$38,557$82,792=0.4657

Hence, the return on equity is 0.4657 or 46.57%.

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Answer 4

Textbook Question

Chapter 3, Problem 35QP

Chapter 3, Problem 35QP, SMOLIRA GOLF. INC. 2016 Income Statement Sales 205,227 Cost of goods sold 138,383 <x-custom-btb-me data-me-id='391' class='microExplainerHighlight'>Depreciation</x-custom-btb-me> 5,910

SMOLIRA GOLF. INC. 2016 Income Statement
Sales	$205,227
Cost of goods sold	138,383
Depreciation	5,910
EBIT	$ 60,934
Interest paid	1,617
Taxable income	$ 59,317
Taxes	20,760
Net income	$ 38,557
Dividends	$14,300
Additions to retained earnings	24,257

Calculating Financial Ratios. Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate):

Short-term solvency ratios

a. Current ratio _____

b. Quick ratio _____

c. Cash ratio _____

Asset utilization ratios

d. Total asset turnover _____

e. Inventory turnover _____

f. Receivables turnover _____

Long-term solvency ratios

g. Total debt ratio _____

h. Debt–equity ratio _____

i. Equity multiplier _____

j. Times interest earned ratio _____

k. Cash coverage ratio _____

Profitability ratios

l. Profit margin _____

m. Return on assets _____

n. Return on equity _____

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

a)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

b)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

c)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

d)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

e)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

f)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

g)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

h)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

i)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

j)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

k)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

l)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

m)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

n)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formulae to calculate the Return on equity (ROE):

ROE=Net incomeTotal equity

Compute the Return on equity (ROE):

ROE=Net incomeTotal equity=$38,557$82,792=0.4657

Hence, the return on equity is 0.4657 or 46.57%.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

a)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

b)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

c)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

d)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

e)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

f)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

g)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

h)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

i)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

j)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

k)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

l)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

m)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

n)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formulae to calculate the Return on equity (ROE):

ROE=Net incomeTotal equity

Compute the Return on equity (ROE):

ROE=Net incomeTotal equity=$38,557$82,792=0.4657

Hence, the return on equity is 0.4657 or 46.57%.

Answer 8

a)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 13

Explanation of Solution

Formula to calculate the current ratio:

Current ratio=Current assetsCurrent liabilities

Compute the current ratio:

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2015=$28,666$6,319=4.54 times

Hence, the current ratio for 2015 is 4.54 times.

Current ratio=Current assetsCurrent liabilitiesCurrent ratio for 2016=$32,409$7,427=4.36 times

Hence, the current ratio for 2016 is 4.36 times.

Answer 14

b)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 19

Explanation of Solution

Formula to calculate Quick ratio:

Quickratio=(Current assets−Inventory)Current liabilities

Compute the quick ratio:

Quick ratio for 2015=(Current assets−Inventory)Current liabilities=($28,666−$17,357)$6,319=$11,309$6,319=1.79 times

Hence, the quick ratio for 2015 is 1.79 times.

Quick ratio for 2016=(Current assets−Inventory)Current liabilities=($32,409−$19,350)$7,427=$13,059$7,427=1.76 times

Hence, the quick ratio for 2016 is 1.76 times.

Answer 20

c)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

Answer 21

c)

Expert Solution

Answer 22

c)

Expert Solution

Answer 23

Expert Solution

Answer 24

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 25

Explanation of Solution

Formula to calculate the cash ratio:

Cash ratio=CashCurrent liabilities

Compute the cash ratio:

Cash ratio for 2015=CashCurrent liabilities=$4,607$6,319=0.73 times

Hence, the cash ratio for 2015 is 0.73 times.

Cash ratio for 2016=CashCurrent liabilities=$4,910$7,427=0.66 times

Hence, the cash ratio for 2016 is 0.42 times.

Answer 26

d)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

Answer 27

d)

Expert Solution

Answer 28

d)

Expert Solution

Answer 29

Expert Solution

Answer 30

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 31

Explanation of Solution

Formula to calculate the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets

Compute the total asset turnover ratio:

Total asset turnover ratio=SalesTotal assets=$205,227$109,219=1.88 times

Hence, the total asset turnover ratio is 1.88 times.

Answer 32

e)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

Answer 33

e)

Expert Solution

Answer 34

e)

Expert Solution

Answer 35

Expert Solution

Answer 36

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 37

Explanation of Solution

Formula to calculate the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory

Compute the inventory turnover ratio:

Inventory turnover ratio=Cost of goods soldInventory=$138,383$19,350=7.15 times

Hence, the inventory turnover ratio is 7.15 times.

Answer 38

f)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

Answer 39

f)

Expert Solution

Answer 40

f)

Expert Solution

Answer 41

Expert Solution

Answer 42

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 43

Explanation of Solution

Formula to calculate the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables

Compute the receivables turnover ratio:

Receivables turnover ratio=SalesAccounts receivables=$205,227$8,149=25.18 times

Hence, the receivables turnover ratio is 25.18 times.

Answer 44

g)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

Answer 45

g)

Expert Solution

Answer 46

g)

Expert Solution

Answer 47

Expert Solution

Answer 48

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 49

Explanation of Solution

Formula to calculate the total debt ratio:

Total debt ratio = (Current liabilities+Long term debt)Total assets

Compute the total debt ratio:

Total debt ratio for the year 2015 = (Current liabilities+Long term debt)Total assets=($6,319+$22,500)$87,354=$28,819$87,354=0.33 times

Hence, the total debt ratio for 2015 is 0.33 times.

Total debt ratio for 2016 = (Current liabilities+Long term debt)Total assets=($7,427+$19,000)$109,219=$26,427$109,219=0.24 times

Hence, the total debt ratio for 2016 is 0.24 times.

Answer 50

h)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

Answer 51

h)

Expert Solution

Answer 52

h)

Expert Solution

Answer 53

Expert Solution

Answer 54

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 55

Explanation of Solution

Formula to calculate the debt-equity ratio:

Debt-equity ratio=Total debtTotal equity

Compute the debt-equity:

Debt-equity ratio for 2015=Total debtTotal equity=$6,319+$22,500$58,533=$28,819$58,533=0.49 times

Hence, the debt-equity ratio for the year 2015 is 0.49 times.

Debt-equity ratio for 2016=Total debtTotal equity=$7,427+$19,000$82,792=$26,427$82,792=0.32 times

Hence, the debt-equity ratio for the year 2016 is 0.32 times.

Note: The total debt is calculated by adding the total-long term debt and total current liabilities.

Answer 56

i)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

Answer 57

i)

Expert Solution

Answer 58

i)

Expert Solution

Answer 59

Expert Solution

Answer 60

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 61

Explanation of Solution

Formula to calculate the equity multiplier:

Equity multiplier ratio=1+debt-equity ratio

Compute the equity multiplier ratio for the year 2015:

Equity multiplier ratio for 2015=1+debt-equity ratio=1+0.49=1.49 times

Hence, the equity multiplier ratio for the year 2015 is 1.49 times.

Equity multiplier ratio for 2016=1+debt-equity ratio=1+0.32=1.32 times

Hence, the equity multiplier ratio for the year 2016 is 1.32 times.

Answer 62

j)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

Answer 63

j)

Expert Solution

Answer 64

j)

Expert Solution

Answer 65

Expert Solution

Answer 66

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 67

Explanation of Solution

Formula to calculate the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest

Compute the times interest earned ratio:

Times interest earned=Earnings before interest and taxesInterest=$60,934$1,617=37.68 times

Hence, the times interest earned is 37.68 times.

Answer 68

k)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

Answer 69

k)

Expert Solution

Answer 70

k)

Expert Solution

Answer 71

Expert Solution

Answer 72

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 73

Explanation of Solution

Formula to calculate the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest

Compute the cash coverage ratio:

Cash coverage ratio=Earnings before interest and taxes+DepreciationInterest=$60,934+$5,910$1,617=$66,844$1,617=41.34 times

Hence, the cash coverage ratio is 41.34 times.

Answer 74

l)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

Answer 75

l)

Expert Solution

Answer 76

l)

Expert Solution

Answer 77

Expert Solution

Answer 78

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 79

Explanation of Solution

Formula to calculate the profit margin ratio:

Profit margin=Net incomeSales

Compute the profit margin:

Profit margin=Net incomeSales=$38,557$205,227=0.1879 or 18.79%

Hence, the profit margin is 18.79%.

Answer 80

m)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

Answer 81

m)

Expert Solution

Answer 82

m)

Expert Solution

Answer 83

Expert Solution

Answer 84

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Answer 85

Explanation of Solution

Formula to calculate the Return on assets (ROA):

ROA=Net incomeTotal assets

Compute the Return on assets (ROA):

ROA=Net incomeTotal assets=$38,557$109,219=0.3530

Hence, the return on assets is 35.30%.

Answer 86

n)

Expert Solution

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.

Explanation of Solution

Formulae to calculate the Return on equity (ROE):

ROE=Net incomeTotal equity

Compute the Return on equity (ROE):

ROE=Net incomeTotal equity=$38,557$82,792=0.4657

Hence, the return on equity is 0.4657 or 46.57%.

Answer 87

n)

Expert Solution

Answer 88

n)

Expert Solution

Answer 89

Expert Solution

Answer 90

Summary Introduction

To find: The financial ratios of Company SG

Introduction:

The process of analyzing and calculating the financial ratios for the evaluation of the performance of the firm and to find the actions that are necessary to improve the firm’s performance is the ratio analysis.

Explanation:

Given information:

The balance sheet of the Company SG shows the following information:

The total assets for the year 2015 are $87,354 and for 2016 is $109,219.
The total liabilities and equity for the year 2015 are $87,354 and for 2016 is $109,219.
The cash at the beginning and end of the year are $4,607 and $4,910 respectively.
The accounts receivable for the year 2015 and 2016 are $6,702 and $8,149 respectively.
The inventory for the year 2015 and 2016 are $17,357 and $19,350 respectively.
The fixed asset for the year 2015 and 2016 are $58,688 and $76,810 respectively.
The accounts payable for the year 2015 and 2016 are $3,413 and $3,846 respectively.
The other current liabilities for the year 2015 and 2016 are $138 and $165 respectively.
The notes payable for the year 2015 and 2016 are $2,768 and $3,416 respectively.
The long-term debt for the year 2015 and 2016 are $22,500 and $19,000.
The common stock and paid in surplus for 2015 are $38,000 and for 2016 are $38,000.
The accumulated retained earnings for 2015 are $20,535 and 2016 are $44,792.
The net income is $38,557.
The depreciation is $5,910.
The dividend paid is $14,300.
The cost of goods sold amounts to $138,383.
The sales are $205,227.
The earnings before interest and taxes are $60,934.
The interest paid is $1,617.
The addition to retained earnings is $24,257.
The taxable income is $59,317.