### Discuss liquidity and profitability ratios

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##### Reference no: EM131749647

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 % %

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