From the information presented in Table 3, calculate the following financial ratios for the Dooley Sportswear Company

Question

Table 3
Financial Data for Dooley Sportswear December 31, 2013
Inventory $206,250
Long-term debt 300,000
Interest expense 5,000
Accumulated depreciation 442,500
Cash 180,000
Net sales (all credit) 1,500,000
Common stock 800,000
Accounts receivable 225,000
Operating expenses 525,000
Notes payable-current 187,500
Cost of goods sold 937,500
Plant and equipment 1,312,500
Accounts payable 168,750
Marketable securities 95,000
Prepaid insurance 80,000
Accrued wages 65,000
Retained earnings-current-year ?
Federal income taxes 5,750

current ratio operating profit margin
acid test ratio net profit margin
average collection period total tangible asset turnover
inventory turnover times interest earned
gross profit margin

Answer 1

Answer:
Current ratio = ($180,000 + $95,000 + $225,000 + $206,250 + $80,000)/($168,750 + $187,500 + $65,000) = ($786,250/$421,250) = 1.87
Acid test ratio = ($180,000 + $95,000 + $225,000 + $80,000)/($168,750 + $187,500 + $65,000) = ($580,000/$421,250) = 1.38
Average collection period = ($225,000)/($1,500,000/360 days) = 54 days
Inventory turnover = ($937,500/$206,250) = 4.55
Gross profit margin = ($562,500/$1,500,000) = 0.375
Operating profit margin = ($37,500/$1,500,000) = 0.025
Net profit margin = ($26,750/$1,500,000) = 0.0178
Total asset turnover = ($1,500,000/$1,656,250) = 0.906
Times interest earned = ($37,500/$5,000) = 7.5 times