Some recent financial statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2013 and 2014 2013 2014 2013 2014 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,851 $ 2,707 Accounts payable $ 2,213 $ 2,720 Accounts receivable 4,707 5,661 Notes payable 1,810 2,236 Inventory 12,718 13,662 Other 102 119 Total $ 20,276 $ 22,030 Total $ 4,125 $ 5,075 Long-term debt $ 14,500 $ 17,260 Owners’ equity Common stock and paid-in surplus $ 44,000 $ 44,000 Fixed assets Accumulated retained earnings 15,714 39,988 Net plant and equipment $ 58,063 $ 84,293 Total $ 59,714 $ 83,988 Total assets $ 78,339 $ 106,323 Total liabilities and owners’ equity $ 78,339 $ 106,323 SMOLIRA GOLF, INC. 2014 Income Statement Sales $ 189,770 Cost of goods sold 127,403 Depreciation 5,213 EBIT $ 57,154 Interest paid 1,310 Taxable income $ 55,844 Taxes 19,545 Net income $ 36,299 Dividends $ 12,025 Retained earnings 24,274 Required: Find the following financial ratios for Smolira Golf (use year-end figures rather than average values where appropriate): (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16). Enter the profitability ratios as percents.) 2013 2014 Short-term solvency ratios a. Current ratio times times b. Quick ratio times times c. Cash ratio times times Asset utilization ratios d. Total asset turnover times e. Inventory turnover times f. Receivables turnover times Long-term solvency ratios g. Total debt ratio times times h. Debt-equity ratio times times i. Equity multiplier times times j. Times interest earned ratio times k. Cash coverage ratio times Profitability ratios l. Profit margin % m. Return on assets % n. Return on equity % Explanation: Here, we need to calculate several ratios given the financial statements. The ratios are: Short-term solvency ratios: a. Current ratio = Current assets / Current liabilities Current ratio2013 = $20,276 / $4,125 Current ratio2013 = 4.92 times Current ratio2014 = $22,030 / $5,075 Current ratio2014 = 4.34 times b. Quick ratio = (Current assets – Inventory) / Current liabilities Quick ratio2013 = ($20,276 – 12,718) / $4,125 Quick ratio2013 = 1.83 times Quick ratio2014 = ($22,030 – 13,662) / $5,075 Quick ratio2014 = 1.65 times c. Cash ratio = Cash / Current liabilities Cash ratio2013 = $2,851 / $4,125 Cash ratio2013 = .69 times Cash ratio2014 = $2,707 / $5,075 Cash ratio2014 = .53 times Asset utilization ratios: d. Total asset turnover = Sales / Total assets Total asset turnover = $189,770 / $106,323 Total asset turnover = 1.78 times e. Inventory turnover = COGS / Inventory Inventory turnover = $127,403 / $13,662 Inventory turnover = 9.33 times f. Receivables turnover = Sales / Receivables Receivables turnover = $189,770 / $5,661 Receivables turnover = 33.52 times Long-term solvency ratios: g. Total debt ratio = (Current liabilities + Long-term debt) / Total assets Total debt ratio2013 = ($4,125 + 14,500) / $78,339 Total debt ratio2013 = .24 times Total debt ratio2014 = ($5,075 + 17,260) / $106,323 Total debt ratio2014 = .21 times h. Debt-equity ratio = (Current liabilities + Long-term debt) / Total equity Debt-equity ratio2013 = ($4,125 + 14,500) / $59,714 Debt-equity ratio2013 = .31 times Debt-equity ratio2014 = ($5,075 + 17,260) / $83,988 Debt-equity ratio2014 = .27 times i. Equity multiplier = 1 + D/E ratio Equity multiplier2013 = 1 + .31 Equity multiplier2013 = 1.31 times Equity multiplier2014 = 1 + .27 Equity multiplier2014 = 1.27 times j. Times interest earned = EBIT / Interest Times interest earned = $57,154 / $1,310 Times interest earned = 43.63 times k. Cash coverage ratio = (EBIT + Depreciation) / Interest Cash coverage ratio = ($57,154 + 5,213) / $1,310 Cash coverage ratio = 47.61 times Profitability ratios: l. Profit margin = Net income / Sales Profit margin = $36,299 / $189,770 Profit margin = .1913, or 19.13% m. Return on assets = Net income / Total assets Return on assets = $36,299 / $106,323 Return on assets = .3414, or 34.14% n. Return on equity = Net income / Total equity Return on equity = $36,299 / $83,988 Return on equity = .4322, or 43.22%

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