Question

Silver ComputerCorporation

Use the financial statementsbelow to complete a financial ratio analysis.

The ratios should becalculated on the ratio worksheet. Make sure to reference

amounts from the statementsonto your ratios. Be sure that your answer

uses the correct format forthat ratio: times, percentage, days, dollar amount.

RatioFormat:

Show with your answer whetherthe ratio is times, perentage, or dollar amount.

For example:

o

Current ratio is times, so it would be shown as anumber compared to one.

(ie. 2.08 to 1 or 2.08:1 )

o

Working capital is a dollar amount, so it would beshown as currency.

(ie. $11, 190 )

o

Net margin is a percentage, so it would be shownwith a % sign.

(ie. 12.7% )

Take a look at the ratiodescriptions in the textbook to determine if the ratio is

times, percentage, or dollaramount.

Decimal Places onRatios

The following are typicallyaccepted rules for decimal places on ratios:

o

Ratios: two decimal places

o

Dollars: two decimal places (the book showed threedecimal places for

earnings per share but we don't need to do that forthis class)

o

Days: one decimal place

o

Percentages: one decimal place (the textbook showedpercentages to two

decimal places but I think that is overkill)

o

Price-Earnings ratio: two decimal places

o

Times: two decimal places

Silver ComputerCorporation

IncomeStatement

For the Year EndedDecember 31, 2016

Sales

$ 47,240

Cost of goods sold

18,920

Gross profit

28,320

Operating expenses

Utilities

$ 6,430

Wages

8,310

Rent

1,730

16,470

Operating income

11,850

Other revenue and expense

Interest revenue

$ 940

Interest expense

1,190

2,130

Income before incometaxes

9,720

Income taxes

3,730

Net income

$ 5,990

Silver ComputerCorporation

Comparative BalanceSheets

As of December 31,2016 and 2015

Change

2016

2015

Amount

Percent

Assets

Current assets

Cash

$ 3,290

$ 6,230

$ (2,940)

-47.2%

Marketable securities

1,120

1,920

(800)

-41.7%

Accounts receivable

3,980

6,790

(2,810)

-41.4%

Merchandise inventory

6,880

5,110

1,770

34.6%

Supplies

1,270

2,130

(860)

-40.4%

Total current assets

16,540

22,180

(5,640)

-25.4%

Plant and equipment

Equipment

10,560

6,450

4,110

63.7%

Truck

26,310

18,310

8,000

43.7%

Total plant and equipment

36,870

24,760

12,110

48.9%

Total assets

$ 53,410

$ 46,940

$ 6,470

13.8%

Liabilities

Current liabilities

Accounts payable

$ 6,940

$ 4,390

$ 2,550

58.1%

Wages payable

990

1,510

(520)

-34.4%

Accrued liabilities

2,420

1,920

500

26.0%

Total current liabilities

10,350

7,820

2,530

32.4%

Long-term liabilities

Long-term notes payable

9,900

6,300

3,600

57.1%

Total liabilities

20,250

14,120

6,130

43.4%

Stockholder's Equity

Common stock

8,460

6,610

1,850

28.0%

Retained earnings

29,700

26,210

3,490

13.3%

Total stockholder'sequity

38,160

32,820

5,340

16.3%

Total liabilities &equity

$ 58,410

$ 46,940

$ 11,470

24.4%

Notes for preparationof financial ratios:

o

All of Silver Corporations sales were onaccount.

o

1,692 shares of common stock were outstanding atthe end of 2016.

o

$2.50 of dividends per share were paid in2016.

o

The market price per share of Silver stock was$34.00 for all of 2016.

Answer this question

SilverComputer Corporation
Liquidity and SolvencyFinancial Ratios
LiquidityRatios
Note - Working Capitalshown as an example to follow on the remainingratios.
Working Capital			16,540
			10,350		1.6:1
Current ratio
Quick ratio
* Quick assets are cash,marketable securities, and accounts receivable
Accounts receivableturnover
Average days to collectreceivables
Inventory turnover
Average days to sellinventory
Operating cycle
Solvency Ratios(Long-term credit risk)
Debt ratio
Interest coverage ratio