Exercise 1811 Wiemers Corporations comparative balance sheet

Exercise 18-11 Wiemers Corporation\'s comparative balance sheets are presented below WIEMERS CORPORATION Balance Sheets December 31 2017 2016 Cash Accounts recelvable (net) Inventory Land Buildings Accumulated depreciation-buildings 4,200 23,100 7,200 25,700 69,800 (14,500) (10,500) $110,400 $119,500 $12,800 30,700 69,100 19,700 $110,400 $119,500 4,500 20,900 10,200 19,500 69,800 Total Accounts payable Common stock Retained earnings 74,000 23,600 Total Wiemers\'s 2017 income statement included net sales of $103,000, cost of goods sold of $59,100, and net income of $14,800. Compute the following ratios for 2017, (Round answers to 2 decimal places, e.g. 1.65, or 1.65% .) Current ratio Acid-test ratio Accounts recelvable turnover Inventory turnover Profit margin Asset turnover Return on assets Return on common stockholders\' equity Debt to assets ratio times times times

Solution

Current assets = Cash + Accounts receivable (net) + Inventory = 4,500+20,900+10,200 = $35,600

Current liabilities = Accounts payable = $12,800

Current ratio = Current assets : Current liabilities = 35,600:12,800 = 2.78:1

Quick asset = Cash + Accounts receivable (net) = 4,500+20,900 = $25,400

Acid test ratio = Quick asset : Current liabilities = 25,400:12,800 = 1.98:1

Average Accounts receivable = (Beginning Accounts receivable + Ending Accounts receivable) ÷ 2 = (23,100+20,900)÷2 = 44,000÷2 = $22,000

Net sales = $103,000

Accounts receivable turnover = Net sales ÷ Average Accounts receivable = 103,000÷22,000 = 4.68 times

Average Inventory = (Beginning inventory + Ending inventory) ÷ 2 = (7,200+10,200)÷2 = 17,400÷2 = $8,700

Cost of goods sold = $59,100

Inventory turnover = Cost of goods sold ÷ Average inventory = 59,100÷8,700 = 6.79 times

Profit margin = Net income ÷ Net sales = 14,800÷103,000 = 0.1437 = 14.37%

Average total assets = (Beginning total assets + Ending total assets) ÷ 2 = (119,500+110,400)÷2 = 229,900÷2 = $114,950

Asset turnover = Net sales ÷ Average total assets = 103,000÷114,950 = 0.90 times

Return on assets = Net income ÷ Average total assets = 14,800÷114,950 = 0.1288 = 12.88%

Average stockholders equity = (Beginning stockholders equity + Ending stockholders equity) ÷ 2 = (88,800+97,600)÷2 = 186,400÷2 = $93,200

Return on common stockholders equity = Net income ÷ Average stockholders equity = 14,800÷93,200 = 0.1588 = 15.88%

Total debt = Accounts payable = $12,800

Debt to assets ratio = Total debt ÷ Total assets = 12,800÷110,400 = 0.1159 = 11.59%

	2017	2016
Common stock	74,000	69,100
Retained earnings	23,600	19,700
Total stockholders equity	$97,600	$88,800