Ratio Analysis for Johnson Inc.

Financial Statement Analysis The Financial Statements for Johnson Inc. for the year ended December 31, 2009, follow. Johnson Inc Johnson Inc Income Statement Balance SheetFor the year ended December 31, 2009 For year ended December 31, 2009 Sales Revenue $160,000 AssetsLess: Cost of goods sold 106,000 Cash $ 500Gross profits $ 54,000 Marketable Securities 1,000 Less: Operating Expenses Accounts Receivable 25,000 Selling Expenses $ 16,000 Inventories 45,500 General and Admin 10,000 Total Current Assets $ 72,000 Lease Expense 1,000 Land $ 26,000 Depreciation 10,000 Buildings & Equip 90,000 Total Operating Expense $ 37,000 Less : Accumulated Depreciation 38,000Operating Profits $ 17,000 Net Fixed Assets $ 78,000 Less: Interest Expense 6,100 Total Assets $ 150,000Net Profits before Taxes $10,900 Less: Taxes 4,360 Liabilities and Stockholders’ EquityNet profit after taxes $ 6,540 Accounts Payable $ 22,000 Notes Payable 47,000 Total Current Liabilities $ 69,000 Long Term Debt $ 22,950 Common Stock $ 31,500 Retained Earnings $ 26,550 Total Liabilities and Equity $ 150,000Use the preceding financial information to complete the following table. Assume the industry averages given in the table are applicable for both 2008 and 2009.Ratio Industry Avg Actual 2008 Actual 2009Current Ratio 1.80 1.84Quick Ratio .70 .78Inventory turnover 2.50 2.59Average collection period 37.5 days 36.5 days Debt Ratio 65% 67%Gross Profit margin 38% 40%Net profit margin 3.5% 3.6% Return on total assets 4.0% 4.0%A. Calculate the above ratios for 2009 and comment on how they relate to the actual ratios for 2008 and the industry average.