McCord Corporation financial statement ratios (current, acid, inventory turnover and more)?

Compute the following: 1. Current ratio 2. acid-test ratio 3 days' sales uncollected 4. inventory turnover 5. days' sales inventory 6. debt to equity ratio 7. times interest earned 8. profit margin ratio 9. total asset turnover 10. return on total assets and 11. return on common stockholders equity.

Selected year-end financial statements of McCord Corporation follow. (Note: All sales are on credit;

selected balance sheet amounts at December 31, 2004, were inventory, $32,400; total assets, $182,400;

common stock, $90,000; and retained earnings, $31,300.)

McCORD CORPORATION

Income Statement

For Year Ended December 31, 2005

Sales . . . . . . . . . . . . . . . . . . . $348,600

Cost of goods sold . . . . . . . . 229,150

Gross profit . . . . . . . . . . . . . 119,450

Operating expenses . . . . . . . . 52,500

Interest expense . . . . . . . . . . 3,100

Income before taxes . . . . . . . 63,850

Income taxes . . . . . . . . . . . . . 15,800

Net income . . . . . . . . . . . . . . $ 48,050

McCORD CORPORATION

Balance Sheet

December 31, 2005

Assets Liabilities and Equity

Cash . . . . . . . . . . . . . . . . . . . . . . $ 9,000 Accounts payable . . . . . . . . . . . . . . . . . . $ 16,500

Short-term investments . . . . . . . . . 7,400 Accrued wages payable . . . . . . . . . . . . . . 2,200

Accounts receivable, net . . . . . . . . 28,200 Income taxes payable . . . . . . . . . . . . . . . . 2,300

Notes receivable (trade)* . . . . . . . . 3,500 Long-term note payable, secured

Merchandise inventory . . . . . . . . . . 31,150 by mortgage on plant assets . . . . . . . . . 62,400

Prepaid expenses . . . . . . . . . . . . . . 1,650 Common stock, $1 par value . . . . . . . . . . 90,000

Plant assets, net . . . . . . . . . . . . . . . 152,300 Retained earnings . . . . . . . . . . . . . . . . . . 59,800

Total assets . . . . . . . . . . . . . . . . . . $233,200 Total liabilities and equity . . . . . . . . . . . . . $233,200

1 Answer

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  • Sandy
    Lv 7
    7 years ago
    Best Answer

    McCORD CORPORATION

    Ratios

    (1) Current ratio: 3.9 to 1

    (2) Acid-test ratio: 2.3 to 1

    (3) Days' sales uncollected: 33.2 days

    (4) Inventory turnover: 7.2 times

    (5) Days' sales in inventory: 49.6 days

    6) Ratio of pledged assets to secured liabilities: 2.4 to 1

    (7) Times interest earned: 21.6 times

    (8) Profit margin: 13.8%

    (9) Total asset turnover: 1.7 times

    (10) Return on total assets: 23.1%

    (11) Return on common stockholders' equity: 35.4%

    You can find the formulas here:

    http://www.cliffsnotes.com/study_guide/Ratio-Analy...

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