Question Details

State what information each ratio is providing to the company



Figure 16-7

Kooper Co.
Income Statement
For the Year Ended December 31, 2013
		
Revenues:		
  Net sales		$383,000
 Less: Cost of goods sold		$121,700
    Gross margin		261,300
Less: Operating expenses		
  Selling expenses	41,500	
  Administrative expenses	56,500	
  Interest expense	      12,000	
    Total expenses		  100,000
Net income		$ 151,300



Kooper Co.
Balance Sheet
December 31, 2013
			
Assets
Current assets:			
  Cash		$53,000	
  Accounts receivable		64,300	
  Marketable securities		10,500	
  Inventory		93,250	
    Total current assets			$221,050
Property, plant, and equipment:			
  Store equipment	$325,000		
    Less Accumulated depreciation	    162,100	$162,900	
  Office equipment	$  149,750		
    Less Accumulated depreciation	    72,750	  77,000	
  Total property, plant, and equipment			    239,900
Total assets			$460,950
			
Liabilities
Current liabilities:			
  Accounts payable		$97,200	
  Salaries payable		   28,700	
    Total current liabilities			$ 125,900
Long-term liabilities:			
  Note payable (due 2013)			   154,000
    Total liabilities			$279,900
			
Stockholders’ Equity
			
Total stockholders’ equity			  181,050
  Total liabilities and equity			$460,950

There were 30,000 shares of common stock outstanding throughout 2013.  Dividends on common stock amounted to $21,000 and dividends on preferred stock amounted to $30,000.  The market value of a share of common stock was $36 at the end of 2013.   The income tax rate is 40%.  The accounts receivable and inventory accounts had beginning balances of $58,500 and $101,400 respectively.  Total assets at the beginning of the year were $430,500.

	1.	Refer to Figure 16-7.  

Required: Calculate the following ratios:
A. Current ratio
B. Quick ratio
C. Accounts receivable turnover ratio and accounts receivable turnover in days 
D. Inventory turnover ratio and inventory turnover in days
 
2.	Refer to Figure 16-7.

Required: Calculate the following ratios:

A. return on sales
B. return on total assets
C. earnings per share
D. price-earnings ratio
3.	Refer to Figure 16-7.

Required: Calculate the following ratios:
A. Debt ratio
B. Debt-to-equity ratio

State what information each ratio is providing to the company.



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