BUSI 320 Comprehensive Problem 1 Version FALL B Use the following information to answer the questions below: note: all sales are credit sales Income Stmt info: 2014 2015 Sales $ 1,050,000 $ 1,128,750 less Cost of Goods Sold: 325,000 346,125 Gross Profit 725,000 782,625 Operating Expenses 575,000 609,500 Earnings before Interest & Taxes 150,000 173,125 Interest exp 25,000 29,000 earnings before Taxes 125,000 144,125 Taxes 50,000 57,650 Net Income $ 75,000 $ 86,475 Balance Sheet info: 12/31/2014 12/31/2015 Cash 60,000 $ 66,000 Accounts Receivable 80,000 $ 83,200 Inventory 110,000 $ 119,900 Total Current Assets $ 250,000 $ 269,100 Fixed Assets (Net) $ 300,000 $ 318,000 Total Assets $ 550,000 $ 587,100 Current Liabilities $ 130,000 $ 136,500 Long Term Liabilities $ 150,000 $ 170,000 Total Liabilities $ 280,000 $ 306,500 Stockholder's Equity $ 270,000 $ 280,600 Total Liab & Equity: $ 550,000 $ 587,100 Compute each of the following ratios for 2014 and 2015 and indicate whether each ratio was getting "better" or "worse" from 2014 to 2015 and whether the 2015 ratio was "good" or "bad" compared to the Industry Avg. (round all numbers to 2 digits past the decimal place) 2014 2015 Getting Better or Getting Worse? 2015 Industry Avg "Good" or "Bad" compared to Industry Avg Profit Margin 0.11 Current Ratio 1.90 Quick Ratio 1.12 Return on Assets .26 Debt to Assets .55 Receivables turnover 18.00 Avg. collection period* 21.20 Inventory Turnover** 8.25 Return on Equity 0.25 Times Interest Earned 8.15 *Assume a 360 day year **Inventory Turnover can be computed 2 different ways. Use the formula listed in the text (the one the text indicates many credit reporting agencies generally use) ...

1. BUSI 320 Comprehensive Problem 1 Version FALL B
Use the following information to answer the questions below:
note: all sales are credit sales
Income Stmt info:
2014
2015
Sales
$ 1,050,000
$ 1,128,750
less Cost of Goods Sold:
325,000
346,125
Gross Profit
725,000
782,625
Operating Expenses
575,000
609,500
Earnings before Interest & Taxes
150,000
173,125

2. Interest exp
25,000
29,000
earnings before Taxes
125,000
144,125
Taxes
50,000
57,650
Net Income
$ 75,000
$ 86,475
Balance Sheet info:
12/31/2014
12/31/2015
Cash
60,000
$ 66,000
Accounts Receivable
80,000
$ 83,200
Inventory

3. 110,000
$ 119,900
Total Current Assets
$ 250,000
$ 269,100
Fixed Assets (Net)
$ 300,000
$ 318,000
Total Assets
$ 550,000
$ 587,100
Current Liabilities
$ 130,000
$ 136,500
Long Term Liabilities
$ 150,000
$ 170,000
Total Liabilities
$ 280,000
$ 306,500
Stockholder's Equity
$ 270,000
$ 280,600
Total Liab & Equity:

4. $ 550,000
$ 587,100
Compute each of the following ratios for 2014 and 2015 and
indicate whether each ratio was getting "better" or "worse"
from 2014 to 2015
and whether the 2015 ratio was "good" or "bad" compared to
the Industry Avg.
(round all numbers to 2 digits past the decimal place)
2014
2015
Getting Better or Getting Worse?
2015 Industry Avg
"Good" or "Bad" compared to Industry Avg
Profit Margin
0.11

5. Current Ratio
1.90
Quick Ratio
1.12
Return on Assets
.26
Debt to Assets
.55
Receivables turnover
18.00
Avg. collection period*
21.20

6. Inventory Turnover**
8.25
Return on Equity
0.25
Times Interest Earned
8.15
*Assume a 360 day year
**Inventory Turnover can be computed 2 different ways. Use
the formula listed in the text
(the one the text indicates many credit reporting agencies
generally use)