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Financial Accounting Ratios

The following are the financial statements for Nederland Consumer Products Company for the fiscal year ended September 30, 2011.

Nederland Consumer Products Company
Income Statement for the Fiscal Year
Ended September 30, 2011

Net sales $ 64,986
Cost of goods sold 30,415
Gross margin $ 34,571
Marketing, research, administrative exp. 18,859
Depreciation 785
Operating income(loss) $ 14,927
Interest expense 366
Earnings(loss) before income taxes $ 14,561
Income taxes 4,478
Net earnings(loss) $ 10,083

Nederland Consumer Products Company
Balance Sheet as of September 30, 2011
Assets: Liabilities and Stockholder's Equity:

Cash and marketable securities $ 5,154 Accounts payable $ 3,980
Investment securities 517 Accrued and other liabilities 7,177
Accounts receivable 3,493 Taxes payable 3,009
Total inventories 3,941 Debt due within one year 6,506
Deferred income taxes 1,023
Prepaid expenses & other receivables 1,861
Total current assets $ 15,989 Total current liabilities $ 20,672
Property, plant, and equip., at cost 31,172 Long-term debt 10,374
Less: Accumulated depreciation 9,741 Deferred income taxes 2,702
Net plant and equipment $ 21,431 Other non-current liabilities 3,069
Net goodwill & other intangible assets 24,363 Total liabilities $ 36,817
Other non-current assets 1,904 Convertible Class A preferred stock 1,389
Common stock 1,904
Retained earnings 23,577
Total stockholders' equity (deficit) $ 26,870
Total assets $ 63,687 Total liabilities and stockholders' equity $ 63,687

Calculate all the ratios for Nederland and compare the firm's ratios with the industry averages below. (Round current ratio, quick ratio, debt ratio, long term debt ratio answers to 2 decimal places, e.g. 12.25 and other answers to 1 decimal place, e.g.12.5 or 12.5%.)

Industry Averages:
Current Ratio 2.05 times
Quick Ratio 0.78 times
Gross margin 23.9 % %
Net profit margin 12.3 % %
Debt ratio 0.23 times
Long-term debt to equity 0.98 times
Interest coverage 5.62
ROA 5.3 % %
ROE 18.8 % %

Solution Preview

Please see excel spreadsheet for full solutions.

Ratios Nederland Industry
Current Ratio Cur Assets / Cur Liabilities 15989 / 20672 = 0.77 ...

Solution Summary

Calculating the following Financial Accounting Ratios: Current Ratio, Quick Ratio, Gross Margin %, Net Margin %, Debt Ratio, Long Term Debt To Equity, Interest Coverage, ROA, and ROE.

$2.19