Given the BS and IS for Simmons Mfg. Co., compute the ratios on the next page. For each ratio indicate if Simmons is doing better or worse than the industry average by providing an âxâ in the appropriate box. SHOW CALCULATIONS ON NEXT PAGE BELOW THE CHART. 15 points
SIMMONS MANUFACTURING COMPANY
Balance Sheet
Assets Liabilities and Stockholdersâ Equity
Cash $ 15,000 Accounts Payable $ 21,000
Accts. Receivable 22,000 Notes Payable 20,000
Inventory 30,000 Accrued Expenses 5,000
Current Assets 67,000 Current Liabilities 46,000
Net Fixed Assets 73,000 Long-Term Debt 30,000
Stockholdersâ Equity 64,000
Total Liabilities +
Total Assets $ 140,000 Stockholders equity $140,000
Income Statement
Sales (80% credit) $120,000
Less: COGS 45,000
Gross Profit 75,000
Selling & Administrative Expenses 20,000
Rent Expense (lease) 8,000
EBIT 47,000
Interest Expense 5,000
EBT 42,000
Taxes (25%) 10,500
Net Income $ 31,500
Common Shares outstanding 15,000
EPS $ 2.10
Ratio
Ratio
For
Simmons
Industry
Average
Ratios
Better
Worse
Profit margin
17.5%
Return on assets
20.8%
Return on equity
35%
Receivables Turnover
4.44x
Avg. Collection Period
68.0 days
Fixed asset turnover
2.4x
Total asset turnover
.76x
Quick Ratio
.85
Debt to Total Assets
.45
Times interest earned
12.0x
Given the BS and IS for Simmons Mfg. Co., compute the ratios on the next page. For each ratio indicate if Simmons is doing better or worse than the industry average by providing an âxâ in the appropriate box. SHOW CALCULATIONS ON NEXT PAGE BELOW THE CHART. 15 points
SIMMONS MANUFACTURING COMPANY
Balance Sheet
Assets Liabilities and Stockholdersâ Equity
Cash $ 15,000 Accounts Payable $ 21,000
Accts. Receivable 22,000 Notes Payable 20,000
Inventory 30,000 Accrued Expenses 5,000
Current Assets 67,000 Current Liabilities 46,000
Net Fixed Assets 73,000 Long-Term Debt 30,000
Stockholdersâ Equity 64,000
Total Liabilities +
Total Assets $ 140,000 Stockholders equity $140,000
Income Statement
Sales (80% credit) $120,000
Less: COGS 45,000
Gross Profit 75,000
Selling & Administrative Expenses 20,000
Rent Expense (lease) 8,000
EBIT 47,000
Interest Expense 5,000
EBT 42,000
Taxes (25%) 10,500
Net Income $ 31,500
Common Shares outstanding 15,000
EPS $ 2.10
| Ratio | Ratio For Simmons | Industry Average Ratios | Better | Worse |
| Profit margin | 17.5% | |||
| Return on assets | 20.8% | |||
| Return on equity | 35% | |||
| Receivables Turnover | 4.44x | |||
| Avg. Collection Period | 68.0 days | |||
| Fixed asset turnover | 2.4x | |||
| Total asset turnover | .76x | |||
| Quick Ratio | .85 | |||
| Debt to Total Assets | .45 | |||
| Times interest earned | 12.0x |
