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Question
Financial information for Sigma Company is presented below. Calculate the following ratios for 2016:(a) Inventory turnover.
(b) Accounts receivable turnover.
(c) Return on total assets.
(d) Times interest earned.
(e) Total asset turnover.
| 2016 | 2015 | |
| Assets: | ||
| Cash | $ 18,000 | $ 22,000 |
| Marketable securities | 25,000 | 0 |
| Accounts receivable | 38,000 | 42,000 |
| Inventory | 61,000 | 52,000 |
| Prepaid insurance | 6,000 | 9,000 |
| Long-term investments | 49,000 | 20,000 |
| Plant assets, net | 218,000 | 225,000 |
| Total assets | $415,000 | $370,000 |
| Net income | $ 62,250 | |
| Sales (all on credit) | 305,000 | |
| Cost of goods sold | 123,000 | |
| Interest expense | 15,600 | |
| Income tax expense | 27,000 | |
Answer
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