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Ratio Calculations

Questions 14-20

Please use this data to complete questions 14-20.

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $)

Assets
2010

Cash and securities
$1,554.0

Accounts receivable
9,660.0

Inventories
13,440.0

Total current assets
$24,654.0

Net plant and equipment
17,346.0

Total assets
$42,000.0

Liabilities and Equity

Accounts payable
$7,980.0

Notes payable
5,880.0

Accruals
4,620.0

Total current liabilities
$18,480.0

Long-term bonds
10,920.0

Total debt
$29,400.0

Common stock
3,360.0

Retained earnings
9,240.0

Total common equity
$12,600.0

Total liabilities and equity
$42,000.0

Income Statement (Millions of $)
2010

Net sales
$58,800.00

Operating costs except deprâ??n
$54,978.0

Depreciation
$1,029.0

Earnings before int. and taxes (EBIT)
$2,793.0

Less interest
1,050.0

Earnings before taxes (EBT)
$1,743.0

Taxes
$610.1

Net income
$1,133.0

Other data:

Shares outstanding (millions)
175.00

Common dividends
$509.83

Int rate on notes payable & L-T bonds
6.25%

Federal plus state income tax rate
35%

Year-end stock price
$77.69

1. What is the firm's current ratio?
0.97
1.08
1.20
1.33

2. What is the firm's quick ratio?
0.49
0.61
0.73
0.87

3. What is the firm's total assets turnover?
0.90
1.12
1.40
1.68

4. What is the firm's inventory turnover ratio?
4.38
4.59
4.82
5.06

5. What is the firm's debt ratio?
45.93%
51.03%
56.70%
70.00%

6. What is the firm's ROA?
2.70%
2.97%
3.26%
3.59%

7. What is the firm's ROE?
8.54%
8.99%
9.44%
9.91%

Solution Preview

1. What is the firm's current ratio?
0.97
1.08
1.20
1.33
Current assets / current liabilities = $24,654.0 / $18,480.0 = 1.33

2. What is the firm's quick ratio?
0.49
0.61
0.73
0.87
(current assets â?" ...

Solution Summary

Detailed Calculations are provided for the following questions:

Questions 14-20

Please use this data to complete questions 14-20.

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $)

Assets
2010

Cash and securities
$1,554.0

Accounts receivable
9,660.0

Inventories
13,440.0

Total current assets
$24,654.0

Net plant and equipment
17,346.0

Total assets
$42,000.0

Liabilities and Equity

Accounts payable
$7,980.0

Notes payable
5,880.0

Accruals
4,620.0

Total current liabilities
$18,480.0

Long-term bonds
10,920.0

Total debt
$29,400.0

Common stock
3,360.0

Retained earnings
9,240.0

Total common equity
$12,600.0

Total liabilities and equity
$42,000.0

Income Statement (Millions of $)
2010

Net sales
$58,800.00

Operating costs except deprâ??n
$54,978.0

Depreciation
$1,029.0

Earnings before int. and taxes (EBIT)
$2,793.0

Less interest
1,050.0

Earnings before taxes (EBT)
$1,743.0

Taxes
$610.1

Net income
$1,133.0

Other data:

Shares outstanding (millions)
175.00

Common dividends
$509.83

Int rate on notes payable & L-T bonds
6.25%

Federal plus state income tax rate
35%

Year-end stock price
$77.69

1. What is the firm's current ratio?
0.97
1.08
1.20
1.33

2. What is the firm's quick ratio?
0.49
0.61
0.73
0.87

3. What is the firm's total assets turnover?
0.90
1.12
1.40
1.68

4. What is the firm's inventory turnover ratio?
4.38
4.59
4.82
5.06

5. What is the firm's debt ratio?
45.93%
51.03%
56.70%
70.00%

6. What is the firm's ROA?
2.70%
2.97%
3.26%
3.59%

7. What is the firm's ROE?
8.54%
8.99%
9.44%
9.91%

$2.19