Ratio Analysis

Fill in all the blanks in the file attach below.

NAME:

SCORE:

		2018	2019
CURRENT ASSETS:
	Cash	$ 26,950.00	$ 31,500.00
	Marketable Securities	$ 85,400.00	$ 60,500.00
	Accounts Receivable	$ 34,000.00	$ 45,600.00
	Notes Receivable	$ 44,000.00	$ 57,450.00
	Inventories	$ 62,400.00	$ 58,900.00
	Total Current Assets:	$ 252,750.00	$ 253,950.00

FIXED ASSETS:	$ 1,086,450.00	$1,188,300.00
TOTAL ASSETS	$ 1,339,200.00	$1,442,250.00

CURRENT LIABILITIES:	$ 107,700.00	$ 78,250.00
LONG TERM LIABILITIES:	$ 681,500.00	$ 644,000.00
		$ 789,200.00	$ 722,250.00

OWNERS EQUITY:	$ 550,000.00	$ 720,000.00
TOTAL LIABILITIES & EQUITY	$ 1,339,200.00	$1,442,250.00

CONDENSED PROFIT & LOSS	2018	2019
Net Income Before Interest & Tax	$ 280,000.00
Income After Interest And Tax	$ 200,000.00

ADDITIONAL INFORMATION
Shares Outstanding	400,000.00	500,000.00
Market Price Per Share	$ 1.45

USING ABOVE INFORMATION, CALCULATE THE FOLLOWING RATIOS FOR 2019:

1. Current Ratio: __________ 2. Quick Ratio:_________

3. TA:TL: __________________ 4. TL:TA: ______________

5. TL:TE: __________________

NAME:

SCORE:

	2018	2019
CURRENT ASSETS:
Cash	$ 13,450.00	$ 15,680.00
Marketable Securities	$ 95,000.00	$ 95,000.00
Accounts Receivable	$ 22,400.00	$ 29,720.00
Inventories	$ 32,000.00	$ 45,000.00
Total Current Assets:	$ 162,850.00	$ 185,400.00

FIXED ASSETS:
Property	$ 150,000.00	$ 150,000.00
Equipment	$ 61,850.00	$ 85,000.00
Furniture	$ 58,000.00	$ 65,000.00
Building	$ 120,000.00	$ 120,000.00
Less Accumulated Depreciation	$ (45,000.00)	$ (52,000.00)
Total Net Fixed Assets:	$ 344,850.00	$ 368,000.00
TOTAL ASSETS	$ 507,700.00	$ 553,400.00

CURRENT LIABILITIES:
Accounts Payable	$ 12,400.00	$ 14,800.00
Short Term Loan	$ 40,000.00	$ 40,000.00
Accrued Expense Payable	$ 8,500.00	$ 8,000.00
Total Current Liabilities	$ 60,900.00	$ 62,800.00

LONG TERM LIABILITIES:
Mortgage	$ 85,000.00	$ 85,000.00
Long Term Loan	$ 60,000.00	$ 80,000.00
Total Long Term Liabilities	$ 145,000.00	$ 165,000.00
Total Liabilities:	$ 205,900.00	$ 227,800.00

OWNERS EQUITY:
Common Stock	$ 240,900.00	$ 262,800.00
Retained Earnings	$ 60,900.00	$ 62,800.00
TOTAL EQUITY:	$ 301,800.00	$ 325,600.00

TOTAL LIABILITIES & EQUITY	$ 507,700.00	$ 553,400.00

INCOME STATEMENT:	2018	2019
Sales	$ 550,000.00	$ 680,000.00
Less Operating Expenses	$(134,000.00)	$(214,400.00)
Operating Income	$ 416,000.00	$ 465,600.00
Less Indirect Expenses	$(245,800.00)	$(268,000.00)
Earning Before Interest & Tax	$ 170,200.00	$ 197,600.00
Interest Expense	$ (35,000.00)	$ (42,000.00)
Income Taxes	$ (68,000.00)	$ (80,000.00)
Earning After Interest & Tax	$ 67,200.00	$ 75,600.00

ADDITIONAL INFORMATION
Shares Outstanding	90,000.00	10,000.00
Cost Of Goods Sold		$ 165,000.00
Market Price Per Share	$ 1.45

USING THE INFORMATION GIVEN, CALCULATE THE FOLLOWING RATIOS FOR 2019:

1. Current Ratio: __________ 2. Quick Ratio:_________

3. TA:TL: __________________ 4. TL:TA: ______________

5. TL:TE: __________________ 6. ROA: ________________

7. EPS; ____________________ 8. ROI: ________________

9. PE Ratio:________________ 10. ART:________________

11. ACP: ___________________

NAME:

SCORE:

	2017	2018	2019
CURRENT RATIO	1.40	1.60	2.10
INVENTORY TURNOVER	37.00	31.00	28.00
ACCOUNTS RECEIVABLE TURNOVER	28.00	25.00	18.00
RETURN ON ASSETS	6.00%	7.20%	7.80%
DEBT TO EQUITY	2.50	2.20	1.90
RETURN ON EQUITY	7.50%	8.80%	9.50%
REVENUE	$ 845,000	$ 862,000	$ 856,000

a. Is the restaurant becoming more efficient in the collection of its account receivable?

b. Over the years has more or less money been invested in inventory?

c. During the period, has the liquidity of the business improved?

d. From the stockholders’ point of view, has the profitability of the business operation improved?

e. If the business wishes to use a long-term loan to expand business, would it be easier to find a lender now than it would have been three years ago?

f. If the business wishes to seek equity financing, would it be easier now than three years ago?

g. Has the working capital increased from three years ago?

NAME:

SCORE:

	2017	2018	2019
CURRENT RATIO	2.40	2.60	2.50
INVENTORY TURNOVER	38.00	38.00	40.00
ACCOUNTS RECEIVABLE TURNOVER	28.00	20.00	15.00
NET RETURN ON ASSETS	10.00%	14.00%	17.00%
DEBT TO EQUITY	3.50	2.20	1.00
RETURN ON EQUITY	9.50%	9.80%	6.50%
REVENUE	$ 850,000	$ 880,000	$ 860,000
EARNING PER SHARE	$ 2.75	$ 2.63	$ 1.30

a. Is the restaurant becoming more efficient in the collection of its account receivable?

b. Over the years has more or less money been invested in inventory?

c. Has the working capital increased since 2017?

d. Did the company issue new stocks to increase equity in 2019?

e. If the business wishes to use a long-term loan to expand business, would it be easier to find a lender now than it would have been 3 years ago?

NAME:

SCORE:

Ratio Analysis

Carolyn’s Café

Carolyn owns Carolyn’s Cafe, and her restaurant is experiencing the effects of the downturn in the economy. Carolyn is trying to analyze her restaurant performance for 2019; however, she needs your help. The following are her income statements for 2018 and 2019.

Income Statement	2018	2019
Sales	1,440,000	782,400
Cost of Sales	484,000	352,000
Gross Profit	956,000	430,400
Operating Expenses	417,000	310,784
Depreciation Expense	15,000	10,000
Operating Income	524,000	109,616
Interest Expenses	125,000	152,616
Income Before Income Taxes	399,000	(43,000)
Taxes (40%)	159,600	0
Net Income	239,400	(43,000)

Per Share Data:
Common Stock Price	$30.00	$12.00
Earnings Per share	$4.78	$-1.57

Below are the 2018 and 2019 Balance Sheets for Carolyn’s Cafe.

Account	2018	2019
Cash	175,000	168,000
Receivables	620,000	600,000
Marketable Securities	760,000	775,000
Inventories	21,000	23,000
Total Current Assets	1,576,000	1,566,000

Fixed Assets	750,000	600,000
Less Accum. Depreciation	262,500	210,000
Net Fixed Assets	487,500	390,000
Total Assets	2,063,500	1,956,000

Accounts Payable	282,500	292,000
Notes Payable	150,000	318,000
Accruals	45,000	67,000
Total Current Liabilities	477,500	677,000

Long-Term Debt	360,000	550,000
Common Stock ($2.00 par)	100,200	54,800
Paid in Capital	901,800	493,200
Retained Earnings	224,000	181,000
Total Liab. and Owners’ Equity	2,063,500	1,956,000
Total Sources and Uses

1. Help Carolyn analyze the health of her cafe by completing the ratio analysis below. Fill in the blanks provided. (Round as in Carolyn’s 2018.)

		Carolyn’s 2018	Carolyn’s 2019
Current Ratio		3.30 times
Quick Ratio		3.26 times
Solvency Ratio		2.46 times
Debt to Assets		40.59%
Inventory Turnover	(Assume inventory was $21,000 in 2017)	23.05 times
Asset Turnover	(Assume TA was 2,063,500 in 2017)	0.70 times
Return on Assets	(Assume TA was 2,063,500 in 2017)	11.60%
Return on Equity	(Assume TE in 2017 was the same in 2018)	19.53%
Profit Margin		16.63%
Price per Earnings Ratio		6.28 times

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