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Given the Balance Sheet and Income Statement for Simmons Maintenance

question 94

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Given the balance sheet and income statement for Simmons Maintenance Company, compute the ratios below. The "right answer" refers to the question of whether a particular ratio for Simmons is better or worse than the industry average. $Given the balance sheet and income statement for Simmons Maintenance Company, compute the ratios below. The right answer refers to the question of whether a particular ratio for Simmons is better or worse than the industry average. \begin{array}{lccc} & \text { Ratios } & \text { Industry } & \text { Circle the } \\ \text { Ratio } & \text { for Simmons } & \text { Average } & \text { right answer }\\ \text { Profit margin } &\underline{\quad\quad}& 17.5 \% & \text { better worse } \\ \text { Return on investment } &\underline{\quad\quad}& 20.8 \% & \text { better worse } \\ \text { Return on equity } &\underline{\quad\quad}& 35 \% & \text { better worse } \\ \text { Receivables turnover } &\underline{\quad\quad}& 4.4 \mathrm{x}& \text { better worse } \\ \text { Avg. collection period }&\underline{\quad\quad} & 68.0 \text { days } & \text { better worse } \\ \text { Inventory turnover }&\underline{\quad\quad} & 3.5 \mathrm{x} & \text { better worse } \\ \text { Capital asset turnover } &\underline{\quad\quad}& 2.4 \mathrm{x} & \text { better worse } \\ \text { Total asset turnover }&\underline{\quad\quad} & .76 \mathrm{x} & \text { better worse } \\ \text { Current ratio }&\underline{\quad\quad} & 1.28 & \text { better worse } \\ \text { Quick ratio } &\underline{\quad\quad}& .85 & \text { better worse } \\ \text { Debt to total assets } &\underline{\quad\quad}& .45 & \text { better worse } \\ \text { Times interest earned }&\underline{\quad\quad} & 12.0 \mathrm{x} & \text { better worse } \\ \text { Fixed charge coverage } &\underline{\quad\quad}& 3.6 \mathrm{x} & \text { better worse } \\ \end{array}$ $\begin{array}{lccc}& \text { Ratios } & \text { Industry } & \text { Circle the } \\\text { Ratio } & \text { for Simmons } & \text { Average } & \text { right answer }\\\text { Profit margin } &\underline{\quad\quad}& 17.5 \% & \text { better worse } \\\text { Return on investment } &\underline{\quad\quad}& 20.8 \% & \text { better worse } \\ \text { Return on equity } &\underline{\quad\quad}& 35 \% & \text { better worse } \\ \text { Receivables turnover } &\underline{\quad\quad}& 4.4 \mathrm{x}& \text { better worse } \\\text { Avg. collection period }&\underline{\quad\quad} & 68.0 \text { days } & \text { better worse } \\ \text { Inventory turnover }&\underline{\quad\quad} & 3.5 \mathrm{x} & \text { better worse } \\ \text { Capital asset turnover } &\underline{\quad\quad}& 2.4 \mathrm{x} & \text { better worse } \\\text { Total asset turnover }&\underline{\quad\quad} & .76 \mathrm{x} & \text { better worse } \\\text { Current ratio }&\underline{\quad\quad} & 1.28 & \text { better worse } \\\text { Quick ratio } &\underline{\quad\quad}& .85 & \text { better worse } \\ \text { Debt to total assets } &\underline{\quad\quad}& .45 & \text { better worse } \\ \text { Times interest earned }&\underline{\quad\quad} & 12.0 \mathrm{x} & \text { better worse } \\\text { Fixed charge coverage } &\underline{\quad\quad}& 3.6 \mathrm{x} & \text { better worse } \\ \end{array}$

Definitions:

Bona Fide Occupational Qualification

A Bona Fide Occupational Qualification (BFOQ) is a legal term that allows employers to hire individuals based on attributes normally considered discrimination if they are reasonably necessary to the normal operation of a particular business.

Equal Employment Opportunity Commission

A federal agency in the United States charged with enforcing laws that prohibit discrimination in employment.

Protected Classes

Refers to the groups of people legally protected from discrimination and harassment in the workplace by law.

Flextime

Scheduling system that allows employees to set their own work hours within constraints specified by the firm.