Problem 4-25 |
Instructions to use the Solution Template |
Step 1 |
Enter the given values from the textbook on page 116 in the yellow colored cells below. |
Step 2 |
In Cell E52, Calculate Current ratio using formula “Current Assets / Current Liabilities” |
Step 3 |
In Cell E53, Calculate Times interest earned using formula “Net Operating Income/ Interest Expense” |
Step 4 |
In Cell E54, Calculate Inventory Turnover using formula “Cost of goods sold/ Inventory” |
Step 5 |
In Cell E55, Calculate Total Asset turn Over using formula “Net Sales / Total Assets” |
Step 6 |
In Cell E56, Calculate Operating Profit Margin using formula “Net Operating Income / Net Sales” |
Step 7 |
In Cell E57, Calculate Operating Return on Assets using formula “Net Operating Income / Total Assets” |
Step 8 |
In Cell E58, Calculate Debt Ratio using formula “( Current Liabilities + Long-term debt) / Total Assets” |
Step 9 |
In Cell E59, Calculate Average Collection Period using formula “( Accounts Receivable * 365 ) / Credit Sales “ |
Step 10 |
In Cell E60, Calculate Fixed Asset Turnover using formula “Net Sales / Net Fixed Assets “ |
Step 11 |
In Cell E61, Calculate Return on Equity using formula “Net Income / Owner’s Equity” |
Given |
J. P. Robard Mfg., Inc. |
Balance Sheet ($000) |
Cash |
Author: Enter the given values from the text book here |
Accounts receivable |
Inventories |
Current assets |
Net fixed assets |
Total assets |
Accounts payable |
Accrued expenses |
Short-term notes payable |
Current liabilities |
Long-term debt |
Owners’ equity |
Total liabilities and owners’ equity |
J. P. Robard Mfg., Inc. |
Income Statement ($000) |
Net sales (all credit) |
Cost of goods sold |
Gross profit |
Operating expenses (includes $500 depreciation) |
Net operating income |
Interest expense |
Earnings before taxes |
Income taxes (40%) |
Net income |
Solution |
Current ratio |
Author: Current Ratio = Current Assets / Current Liabilities |
Times interest earned |
Author: Times interest Earned= Net Operating Income/ Interest Expense |
Inventory turnover |
Author: Inventory Turnover= Cost of goods sold/ Inventory |
Total asset turnover |
Author: Total Asset turn Over = Net Sales / Total Assets |
Operating profit margin |
Author: Operating Profit Margin = Net Operating Income / Net Sales |
Operating return on assets |
Author: Operating Return on Assets = Net Operating Income / Total Assets |
Debt ratio |
Author: Debt Ratio = ( Current Liabilities + Long-term debt) / Total Assets |
Average collection period |
Author: Average Collection Period =( Accounts Receivable * 365 ) / Credit Sales |
Fixed asset turnover |
Author: Fixed Asset Turnover = Net Sales / Net Fixed Assets |
Return on equity |
Author: Return on Equity = Net Income / Owner’s Equity |
Leave a Reply
Want to join the discussion?Feel free to contribute!