P7. BuSINESS AppLICATION ▶ A summary of data from Pinder Construction Supply Company’s income statements and balance sheets for 2014 and 2013 follows.
✔ 1b: XXXXXXXXXXcurrent ratio: 2.0
✔ 2c: 2014 return on assets: 14.8%
Current assets
2014
$ 366,000
2013
$ 310,000
Total assets
2,320,000
1,740,000
Current liabilities
180,000
120,000
Long-term liabilities
800,000
580,000
Owner’s equity
1,340,000
1,040,000
Net sales
4,600,000
3,480,000
Net income
300,000
204,000
Total assets and owner’s equity at the beginning of 2013 were $1,360,000 and
$840,000, respectively.
ReQUIReD
1. Compute the following liquidity measures for 2013 and 2014: (a) working capital and (b) current ratio. Comment on the differences between the years. (Round to one decimal place.)
2. Compute the following measures of profitability for 2013 and 2014: (a) profit mar- gin, (b) asset turnover, (c) return on assets, (d) debt to equity ratio, and (e) return on equity. Comment on the change in performance from 2013 to XXXXXXXXXXRound to one decimal place.)