Rochelle Corporation’s financial statements are as follows:
Rochelle Corporation
Comparative Balance Sheet
(pesos in millions)
This Year
ASSETS
Current assets:
Cash
Marketable securities
Accounts receivable
Inventories
Other current assets
Total current assets
Property and equipment, net
Other assets
Total assets
P
P
LIABILITIES AND STOCKHOLDER’S
EQUITY
Current liabilities:
Accounts payable
Short-term bank loans
Accrued payables
Other current liabilities
Total current liabilities
Long-term liabilities
Total liabilities
Stockholder’s equity:
Common stock and additional paid-in capital
Retained earnings
Total stockholder’s equity
Total liabilities and stockholder’s equity
P
P
Last Year
281
157
288
692
278
1,696
2,890
758
5,344
P
391
710
757
298
2,156
904
3,060
P
40
2,244
2,284
5,344
P
P
Rochelle Corporation
Income Statement
(pesos in millions)
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Store operating expenses
Other operating expenses
Depreciation and amortization
P
This Year
9,411
3,999
5,412
3,216
294
467
313
141
224
636
216
1,530
2,288
611
4,429
341
700
662
233
1,936
265
2,201
40
2,188
2,228
4,429
General and administrative expenses
Total selling and administrative expenses
Net operating income
Plus interest and other income
Interest expense
Net income before taxes
Income taxes (about 36%)
Net income
P
489
4,466
946
110
0
1,056
384
672
Required:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Compute the return on total assets.
Compute the return on equity.
Compute the current ratio.
Compute the acid-test ratio.
Compute the inventory turnover.
Compute the average sale period.
Compute the debt-to-equity ratio.
Compute the total asset turnover.
Compute the net profit margin percentage.
1. Return on total assets:
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒+[𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝑥 (1−𝑇𝑎𝑥 𝑟𝑎𝑡𝑒)]
Return on total assets =
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
2. Return on equity:
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
Return on equity = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟′ 𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
3. Current ratio:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
Current ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
4. Acid-test ratio:
Acid-test ratio =
𝐶𝑎𝑠ℎ+𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠+𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒+𝑆ℎ𝑜𝑟𝑡−𝑡𝑒𝑟𝑚 𝑛𝑜𝑡𝑒𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
5. Inventory turnover:
𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
Inventory turnover = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑏𝑎𝑙𝑎𝑛𝑐𝑒
6. Average sale period:
Average sale period =
365 𝑑𝑎𝑦𝑠
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟
7. Debt-to-equity ratio:
𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt-to-equity ratio = 𝑆𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟′ 𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
8. Total asset turnover:
𝑆𝑎𝑙𝑒𝑠
Total asset turnover = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
9. Net profit margin percentage:
Net profit margin percentage =
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑆𝑎𝑙𝑒𝑠