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Ratios and Financial Planning at S&S Air, Inc.

In: Business and Management

Submitted By JanaBeryna
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Ratios and Financial Planning at S&S Air, Inc.

1,
Profitability Ratios

1. Profit margin = net income/sales
Profit margin = $1,005,600 / $20,077,000 Profit margin = 0.0501 or 5.01%
2. Return on assets (investment) = net income/total assets
Return on assets = $1,005,600 / 15,453,900 Return on assets = 0.0651 or 6.51% 3. Return on equity = net income/stockholder’s equity Return on equity = $1,005,600 / $9,466,820 Return on equity = 0.1062 or 10.62%

Asset Utilization Ratios 4. Receivables Turnover = sales (credit)/receivables Receivables turnover = $20,077,000 / $1,534,680 Receivables turnover = 13.08 times 5. Average collection period = accounts receivable/average daily credit sales Average collection period = 365 days / ($20,077,000 / $1,534,680) Average collection period = 28 days 6. Inventory turnover = sales/inventory Inventory turnover = $14,985,000 / $1,238,500 Inventory turnover = 12.10 times 7. Fixed asset turnover = sales/fixed assets Fixed asset turnover = $20,077,000 / $12,315,680 Fixed asset turnover = 1.63 times 8. Total asset turnover = sales/total assets Total asset turnover = $20,077,000 / $15,453,900 Total asset turnover = 1.30 times Liquidity Ratios 9. Current Ratio = current assets/current liabilities Current ratio = $3,138,220 / $2,162,080 Current ratio = 1.45 times 10. Quick Ratio = current assets – inventory/current liabilities Quick ratio = ($3,138,220 – 1,238,500) / $2,162,080 Quick ratio = 0.88 times

Debt Utilization Ratios 11. Debt to total assets = total debt/total assets Debt to total assets = ($2,162,080 + $3,825,000) / $15,453,900 Debt to total assets = 0.39 or 39% 12. Times interest earned = income before interest and taxes/interest Times interest earned = $2,038,000 / $362,000 Times interest earned =…...

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