Financial statements for Rardin Company appear below:
Rardin Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
|
Year 2
|
Year 1
|
|
Current assets:
|
|
|
|
Cash and marketable securities
|
$ 160
|
$ 160
|
|
Accounts receivable, net
|
180
|
160
|
|
Inventory
|
160
|
180
|
|
Prepaid expenses
|
80
|
70
|
|
Total current assets
|
580
|
570
|
|
Noncurrent assets:
|
|
|
|
Plant & equipment, net
|
1,180
|
1,110
|
|
Total assets
|
$1,760
|
$1,680
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$ 130
|
$ 140
|
|
Accrued liabilities
|
40
|
60
|
|
Notes payable, short term
|
290
|
280
|
|
Total current liabilities
|
460
|
480
|
|
Noncurrent liabilities:
|
|
|
|
Bonds payable
|
260
|
300
|
|
Total liabilities
|
720
|
780
|
|
Stockholders' equity:
|
|
|
|
Preferred stock, $5 par, 10%
|
100
|
100
|
|
Common stock, $5 par
|
160
|
160
|
|
Additional paid-in capital--common stock
|
150
|
150
|
|
Retained earnings
|
630
|
490
|
|
Total stockholders' equity
|
1,040
|
900
|
|
Total liabilities & stockholders' equity
|
$1,760
|
$1,680
|
Rardin Company
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
|
Sales (all on account)
|
$1,900
|
|
Cost of goods sold
|
1,330
|
|
Gross margin
|
570
|
|
Operating expenses
|
220
|
|
Net operating income
|
350
|
|
Interest expense
|
30
|
|
Net income before taxes
|
320
|
|
Income taxes (30%)
|
96
|
|
Net income
|
$ 224
|
Required:
Compute the following for Year 2:
a. Current ratio.
b. Acid-test (quick) ratio.
c. Average collection period (age of receivables).
d. Inventory turnover.
e. Times interest earned.
f. Debt-to-equity ratio.