Charter Company
1. Calculate the following ratios for each year during the period 1980-1983. Comment on the trend indicated by each ratio with respect to the financial performance and condition of the Charter Company.
A. Profitability:
Return on average total assets (assume a 46% income tax rate) = EBIT/Total Assets
1983 = 133896 / 1813199 = .073845
1982 = 108180 / 1628046 = .066448
1981 = 155673 / 1541326 = .100999
1980 = 145485 / 1746260 = .083312
1979 = 446649 / 1728694 = .258373
B. Turnover:
i. Accounts receivable (based on average gross trade receivables) = Net Credit Sales/Avg Acct. Rec.
1983 = 294715 / 340418 = .865744
1982 = 262646 / 327610 = .801703
1981 = 343862 / 375659 = .915357
1980 = 322237 / 367762 = .876211
1979 = 296344 / 333071 = .889732
ii. Inventory (based on average total inventory) = Sales/Inventory
1983 = 5774728 / 369716 = 15.61936
1982 = 4060563 / 239749 = 16.93673
1981 = 4980251 / 136687 = 36.43544
1980 = 4563672 / 295571 = 15.44019
1979 = 4298727 / 348180 = 12.34628
iii. Total Assets (based on average total asset) = Net Sales/Total Assets
1983 = 5774728 / 1813199 = 3.184829
1982 = 4060563 / 1628046 = 2.494133
1981 = 4980251 / 1541326 = 3.231147
1980 = 4563672 / 1746260 = 2.613398
1979 = 4298727 / 1728694 = 2.486691
C. Liquidity:
i. Current Ratio = Current Assets/Current Liabilties
1983 = 801727 / 700755 = 1.144090
1982 = 641876 / 540659 = 1.187210
1981 = 608945 / 459123 = 1.326322
1980 = 773662 / 535457 = 1.444863
1979 = 793854 / 501315 = 1.583543
ii. Quick Ratio = Current Assets - Inventory/Current Liabilities
1983 = (801727 - 369716) / 700755 = .616494
1982 = (641876 - 239749) / 540659 = .743772
1981 = (608945 - 136687) / 459123 = 1.028609
1980 = (773662 - 295571) / 535457 = .892865
1979 = (793854 - 348180) / 501315 = .889001
D. Solvency:
i. Total liabilities to Total equities =Total Liabilities/Stockholder’s equity
1983 = (1813199 - 614127) / 614127 = 1.952482
1982 = (1628046 - 640791) / 640791 = 1.540682
1981 = (1541326 -
A. Profitability:
Return on average total assets (assume a 46% income tax rate) = EBIT/Total Assets
1983 = 133896 / 1813199 = .073845
1982 = 108180 / 1628046 = .066448
1981 = 155673 / 1541326 = .100999
1980 = 145485 / 1746260 = .083312
1979 = 446649 / 1728694 = .258373
B. Turnover:
i. Accounts receivable (based on average gross trade receivables) = Net Credit Sales/Avg Acct. Rec.
1983 = 294715 / 340418 = .865744
1982 = 262646 / 327610 = .801703
1981 = 343862 / 375659 = .915357
1980 = 322237 / 367762 = .876211
1979 = 296344 / 333071 = .889732
ii. Inventory (based on average total inventory) = Sales/Inventory
1983 = 5774728 / 369716 = 15.61936
1982 = 4060563 / 239749 = 16.93673
1981 = 4980251 / 136687 = 36.43544
1980 = 4563672 / 295571 = 15.44019
1979 = 4298727 / 348180 = 12.34628
iii. Total Assets (based on average total asset) = Net Sales/Total Assets
1983 = 5774728 / 1813199 = 3.184829
1982 = 4060563 / 1628046 = 2.494133
1981 = 4980251 / 1541326 = 3.231147
1980 = 4563672 / 1746260 = 2.613398
1979 = 4298727 / 1728694 = 2.486691
C. Liquidity:
i. Current Ratio = Current Assets/Current Liabilties
1983 = 801727 / 700755 = 1.144090
1982 = 641876 / 540659 = 1.187210
1981 = 608945 / 459123 = 1.326322
1980 = 773662 / 535457 = 1.444863
1979 = 793854 / 501315 = 1.583543
ii. Quick Ratio = Current Assets - Inventory/Current Liabilities
1983 = (801727 - 369716) / 700755 = .616494
1982 = (641876 - 239749) / 540659 = .743772
1981 = (608945 - 136687) / 459123 = 1.028609
1980 = (773662 - 295571) / 535457 = .892865
1979 = (793854 - 348180) / 501315 = .889001
D. Solvency:
i. Total liabilities to Total equities =Total Liabilities/Stockholder’s equity
1983 = (1813199 - 614127) / 614127 = 1.952482
1982 = (1628046 - 640791) / 640791 = 1.540682
1981 = (1541326 -