Question : 195. Financial information for Sigma Company presented below.Calculate the following ratios : 1257769

 

195. Financial information for Sigma Company is presented below.Calculate the following ratios for 2016:(a) Inventory turnover.(b) Accounts receivable turnover.(c) Return on total assets.(d) Times interest earned.(e) Total asset turnover. 

 

2016

2015

Assets:

 

 

Cash……………………….

$   18,000

$  22,000

Marketable securities…………….

25,000

0

Accounts receivable………………

38,000

42,000

Inventory…………………….

61,000

52,000

Prepaid insurance……………….

6,000

9,000

Long-term investments……………

49,000

20,000

Plant assets, net………………..

  218,000

  225,000

Total assets…………………..

$415,000

$370,000

 

 

 

Net income…………………..

$ 62,250

 

Sales (all on credit)………………

305,000

 

Cost of goods sold……………….

123,000

 

Interest expense………………..

15,600

 

Income tax expense………………

27,000

 

 

 

 

196. The following summaries from the income statements and balance sheets of Kouris Company and Brittania, Inc. are presented below.(1) For both companies for 2016, compute the:(a) Current ratio(b) Acid-test ratio(c) Accounts receivable turnover(d) Inventory turnover(e) Days’ sales in inventory(f) Days’ sales uncollectedWhich company do you consider to be the better short-term credit risk? Explain.(2) For both companies for 2016, compute the:(a) Profit margin ratio(b) Return on total assets(c) Return on common stockholders’ equityWhich company do you consider to have better profitability ratios? 

Kouris CompanyConsolidated Balance Sheets

(in millions)

 

May 31

 

2016

2015

Assets

 

Current assets:

 

 

    Cash and cash equivalents…………………..

$   634.0

$575.5

    Accounts receivable, net of allowance……………

2,101.1

1,804.1

    Inventories……………………………

1,514.9

1,373.8

    Other current assets………………………

     429.9

     401.3

       Total current assets……………………..

  4,679.9

  4,154.7

Property, plant, and equipment, net………………

1,620.8

1,614.5

Other long term assets………………………

     413.2

    670.8

     Total assets…………………………..

$6,713.9

$6,440.0

 

 

 

Liabilities and Stockholders’ Equity

 

Current liabilities:

 

 

    Current portion of long-term debt………………

$   205.7

$     55.3

    Notes payable………………………….

75.4

425.2

    Accounts payable………………………..

572.7

504.4

    Accrued liabilities………………………..

1,054.2

765.3

    Income taxes payable……………………..

     107.2

       83.0

       Total current liabilities……………………

2,015.2

1,833.2

Long term liabilities………………………..

     708.0

     767.8

       Total liabilities…………………………

  2,723.2

  2,601.0

Stockholders’ equity:

 

 

    Common stock………………………….

2.8

2.8

    Contributed capital in excess of par value………….

589.0

538.7

     Unearned stock compensation………………..

(0.6)

(5.1)

    Accumulated other comprehensive loss…………..

(239.7)

(192.4)

    Retained earnings……………………….

  3,639.2

  3,495.0

      Total stockholders’ equity………………….

  3,990.7

  3,839.0

       Total liabilities and stockholders’ equity………….

$6,713.9

$6,440.0

 

Kouris Company

Consolidated Statement of Income

May 31, 2016

(in millions)

Revenues……………………………

$10,697.0

Cost of sales………………………….

    6,313.6

Gross profit………………………….

4,383.4

Operating expenses……………………..

    3,137.6

Operating income………………………

1,245.8

Interest expense……………………….

42.9

Other revenues and expenses……………….

         79.9

Income before tax………………………

1,123.0

Income taxes…………………………

       382.9

Income before effect of accounting change……….

740.1

Cumulative effect of accounting change, net of tax…..

       266.1

Net income…………………………..

$     474.0

 

 

 

Brittania, Inc.

Consolidated Balance Sheets

 

Jan. 3,

Jan. 4,

 

2016

2015

Assets

 

Current assets:

 

 

    Cash and cash equivalents…………………..

$34.5

$22.2

    Accounts receivable, net of allowance……………

15.5

14.7

    Inventories……………………………

27.2

28.4

    Other current assets………………………

     3.5

    4.2

       Total current assets……………………..

80.7

69.5

Property, plant, and equipment, net………………

5.7

7.0

Other long term assets………………………

    1.1

    1.5

     Total assets…………………………..

$87.5

$78.0

 

 

 

 

Liabilities and Stockholders’ Equity

 

Current liabilities:

 

 

    Accounts payable………………………..

$  8.5

$  6.6

    Accrued liabilities………………………..

   7.8

   5.6

       Total current liabilities……………………

16.3

12.2

Long term liabilities………………………..

   2.5

   2.6

       Total liabilities…………………………

18.8

14.8

Stockholders’ equity:

 

 

    Common stock………………………….

2.3

2.3

    Contributed capital in excess of par value………….

17.8

17.4

     Unearned stock compensation………………..

(0.1)

(0.5)

    Accumulated other comprehensive loss…………..

(0.9)

(1.3)

    Treasury stock………………………….

(6.3)

(5.4)

    Retained earnings……………………….

  55.9

  50.7

      Total stockholders’ equity………………….

  68.7

  63.2

       Total liabilities and stockholders’ equity………….

$87.5

$78.0

  

Brittania, Inc.

Consolidated Statement of Income

January 3, 2016

(in millions)

Revenues……………………………

$133.5

Cost of sales………………………….

    87.3

Gross profit………………………….

46.2

Operating expenses……………………..

    37.3

Operating income………………………

8.9

Interest expense……………………….

(0.1)

Other revenues and expenses……………….

     0.3

Income before tax………………………

9.1

Income taxes…………………………

     3.9

Net income…………………………..

$   5.2

 

 

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