Reference no: EM131241250

1. Selected recent balance sheet and income statement information for Somerset, Inc. follows:

(in millions)	2013	2012
Average inventory	$ 1,562	$ 1,738
Average accounts receivable	1,641	1,775
Average accounts payable	983	1.136
Sales	10,800	14,342
Cost of goods sold	8,631	11,402

a. Calculate accounts receivable turnover for 2013 and 2012. Has it improved during the year or worsened?

b. Calculate inventory turnover for 2013 and 2012. Has it improved during the year or worsened?

2. Selected balance sheet and income statement information for two manufacturing companies: Calico, Inc. and Packard Corporation follows:

	Calico(in $ millions)	Packard (in $ millions)
Cash	$ 930	$13,279
Marketable securities	190	55
Accounts receivable	1,730	19,212
All other current assets	2,153	19,993
Total current liabilities	2,432	43,003
Total liabilities	4,796	74,282
Total equity	4,020	40,517
Pre-tax income	640	9,415
Interest expense	35	597

a. Calculate the current ratio and quick ratio for both companies.
b. Which company is more liquid?
c. Calculate the times-interest-earned ratio and debt-to-equity ratio for both companies.
d. Which company is more solvent?

3. The following is selected balance sheet and income statement information for Menendez Company.

	Current Assets	Gross Profit on Sales	Net Sales	Net Income	Average Total Assets	Average Common Stockholders' Equity
2013	$24,031	$100,340	$150,003	$11,304	$136,855	$75,834

Compute the following ratios:
a. Gross profit percentage
b. Return on sales
c. Asset turnover
d. Return on assets
e. Return on common stockholders' equity (Menendez Company has no preferred stock)