FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Financial information for Sigma Company is presented below. Calculate the following ratios for Year 2.

(a) Inventory turnover.
(b) Accounts receivable turnover.
(c) Return on total assets.
(d) Times interest earned.
(e) Total asset turnover.

  Year 2 Year 1
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 after interest expense and taxes $ 62,250
Sales (all on credit) 305,000
Cost of goods sold 123,000
Interest expense 15,600
Income tax expense 27,000
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