Discuss liquidity and profitability ratios

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Liquidity and Profitability Ratios

Julio Company has had poor operating results for the past two years. As Julio's accountant, you have the following information available to you:

  2014   2013
Current assets $49,500   $39,500
Total assets 145,000   110,000
Current liabilities 20,200   10,100
Long-term liabilities 20,200   -
Stockholders' equity 96,000   99,900
Net sales 203,000   153,000
Net income 16,000   11,000

Total assets and stockholders' equity at the beginning of 2013 were $90,000 and $80,000, respectively. Assume that there was a dividend distribution in 2013.

1.  Compute the following measures of liquidity for 2013 and 2014: (a) working capital and (b) current ratio. Round your current ratio values to one decimal place.

  2014   2013
a.  Working capital mce_markernbsp;    mce_markernbsp; 
b.  Current ratio  

2.  Compute the following measures of profitability for 2013 and 2014: (a) profit margin, (b) asset turnover, (c) return on assets, (d) debt to equity ratio, and (e) return on equity. Round your answers to one decimal place.

  2014 2013
a.  Profit margin % %
b.  Asset turnover times times
c.  Return on assets % %
d.  Debt to equity ratio % %
e.  Return on equity % %

Reference no: EM131749647

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