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	%	%