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Financial statements for Askew Industries for 2016 are shown below (in $000s): 2016 Income...

Question:

Financial statements for Askew Industries for 2016 are shown below (in $000s):

2016 Income Statement

Sales $8,800
Cost of goods sold (6,150)
Gross profit 2,650
Operating expenses (1,850)
Interest expense (140)
Tax expense (264)
Net income $396

Comparative Balance Sheets

Dec. 31, 2016 Dec 31, 2015
Assets
Cash $540 $440
Accounts receivable 540 340
Inventory 740 540
Property, plant, and equipment (net) 1,400 1,500
$3,220 $2,820
Liabilities and Shareholders' Equity
Current liabilities $740 $490
Bonds payable 1,100 1,100
Paid-in capital 540 540
Retained earnings 840 690
$3,220 $2,820

Calculate the following ratios for 2016.

(Consider 365 days a year. Do not round intermediate calculations and round your final answers to 2 decimal places.)

1. Inventory turnover ratio

2. Average days in inventory days

3. Receivables turnover ratio

4. Average collection period days

5. Asset turnover ratio

6. Profit margin on sales %

7. Return on assets %

8. Return on shareholders' equity %

9. Equity multiplier times

10. Return on shareholders' equity (using the DuPont framework)

Financial Ratios

Financial Ratios are divided into many categories. Liquidity ratios, solvency ratios, etc. These kinds of ratios help the company in making relevant decisions for the company as a whole, as well as the investors.

Answer and Explanation: 1

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1. Inventory turnover ratio: 9.6 times

Cost of Goods Sold / Average Inventory
{6,150 / (740+ 540 / 2)}
9.6 times

2. Average days in inventory days: ...

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Commonly Used Financial Ratios

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Chapter 13 / Lesson 6
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Financial ratios are used to calculate the relationship between variables, such as a company's financial health and performance. Discover and calculate commonly used financial ratios, including current ratio, debt ratio, and gross margin.


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