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Farr Corporation for 2003: Compute the following listed ratios for 2003 showing supporting calculations...

RATIO ANALYSIS

The condensed financial statements of Farr Corporation for 2003 are presented below.

Farr Corporation Farr Corporation
Balance Sheet Income Statement
December 31, 2003 For the Year Ended December 31, 2003

Assets Revenues $2,000,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,020,000
investments $ 60,000 Selling and administrative
Accounts receivable 70,000 expenses 680,000
Inventories 140,000 Interest expense 50,000
Total current assets 270,000 Total expenses 1,750,000
Property, plant, and Income before income taxes 250,000
equipment (net) 730,000 Income tax expense 100,000
Total assets $1,000,000 Net income $ 150,000

Liabilities and Stockholders' Equity
Current liabilities $ 100,000
Long-term liabilities 380,000
Stockholders' equity 520,000
Total liabilities and
stockholders' equity $1,000,000

Additional data as of December 31, 2002: Inventory = $100,000; Total assets = $800,000; Stockholders' equity = $480,000.

Instructions: Compute the following listed ratios for 2003 showing supporting calculations.

(a) Current ratio = .

(b) Debt to total assets ratio = .

(c) Times interest earned = .

(d) Inventory turnover = .

(e) Profit margin = .

(f) Return on stockholders' equity = .

(g) Return on assets = .

Solution Preview

(a) Current ratio = Current assets / Current liabilities = 270,000 / 100,000=2.7

(b) Debt to total assets ratio = Long-term liabilities / Total ...

Solution Summary

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$2.19