Calculating activity and profitability ratios
Response to the following problem:
Financial statements for Askew Industries for 2016 are shown below (in $000's):
2016 Income Statement
|
Sales
|
$ 9,000
|
|
Cost of goods sold
|
(6,300)
|
|
Gross profit
|
2,700
|
|
Operating expenses
|
(2,000)
|
|
Interest expense
|
(200)
|
|
Tax expense
|
(200)
|
|
Net income
|
$ 300
|
|
Comparative Balance Sheet*
|
|
Doc. 31
|
|
2016
|
2015
|
|
Assets
|
|
|
|
Cash
|
$ 600
|
$ 500
|
|
Accounts receivable
|
600
|
400
|
|
inventory
|
800
|
600
|
|
Property, plant, and equipment (net)
|
2,000
|
2100
|
|
Liabilities and Shareholders' Equity
|
$4,000
|
$3,600
|
|
|
|
Current liabilities
|
$1,100
|
$850
|
|
Bond Payable
|
1,400
|
1,400
|
|
Paid-in-Capital
|
600
|
600
|
|
Retained earnings
|
900
|
250
|
|
|
$4,000
|
$3,600
|
Required:
Calculate the following ratios for 2016.
1. Inventory turnover ratio
2. Average days in inventory
3. Receivables turnover ratio
4. Average collection period
5. Asset turnover ratio
6. Profit margin on sales
7. Return on assets
8. Return on shareholders' equity
9. Equity multiplier
10. Return on shareholders' equity (using the DuPont framework)