Managerial Accounting Ch. 21

1) Return on sales - nY/Sales

= 5400/60000

= .09

2) ROA - nY + Int Exp (net of tax) / Avg Total Assets

top = 5400 + (1500 x .06) = 6300

avg tot. assets: = 40000 + 38250 / 2 = 39375

(6300 / 39375) = .16

3) ROE - nY/Avg Common Stockholders Equity

5400 / [(19500 + 16275)/2]

= .3018

4) Current ratio - Current assets / Current liabilities

10,800 / 9000

= 1.2

5) Acid - Test - Quick Assets / Current Liabilities

QA= Cash & Mkt. Sec. + A/R

(1950 +3600)/9000

= .61

6) Debt to Equity Ratio - Total Liabilities/Total stockholders Equity

21000/19500

= 1.08

7) Interest Coverage - Operating Y (nY before taxes) / Int Expense

9000 / 1500

= 6

8) Dividend Payout Ratio - Div p/ share of common stock / earnings p/ share

3.86 / 8.18

= 47.19

name of ratio Indstry Ratio Tioga Effect

Current 1.86 1.2 -

Acid-Test 0.85 0.61 -

Debt-Equity 1.23 1.08 -

Int Coverage 7.78 6 -

Dividend Payout 39.57 47.19% +

Return on Sales 3.42 9% +

ROA 6.37 16% +

ROE 12.48 30.18% +

Tioga's operations have proven them to perform at a level where risk is reduced