Question

Presented below are select figures from the balance sheet of Einstein Company for 2018 and 2017.

Einstein Company Balance Sheet As at August 31
	2018	2017
Total Assets	$284,440	$203,851
Total Liabilities	$111,155	$69,693
Stockholders' Equity	$173,285	$134,158

In 2018, Einstein Company had sales of $567,000 and net income of $48,200. Calculate the ratios for 2018 as indicated below.

Do not enter dollar signs or commas in the input boxes.
Round your answers to 2 decimal places.

Return on Assets (Percent): Answer%
Asset Turnover: Answer times
Debt-to-Equity (Decimal): Answer
Debt-to-Total-Assets (Percent): Answer%

Answer 1

Answer)

Calculation of return on assets for the year 2018:

Return on assets = Net Income/ Average Total Assets

= $ 48,200/ $ 244,145.50

= 19.74%

Calculation of Asset turnover ratio fot the year 2018:

Asset Turnover ratio = Net Sales/ Average Total Assets

= $ 567,000/ $ 244,145.50

= 2.32 times

Calculation of debt to equity ratio for the year 2018

Debt to equity ratio = total debt/ Shareholders equity

= $ 111,155/ $ 173,285

= 0.64 times

Calculation of debt to total assets ratio for the year 2018:

Debt to total assets ratio = total Debt/ total assets

= $ 111,155/ $ 284,440

= 0.39 times

Working Note:

Calculation of Average Total Assets:

Average total assets = (total assets in the beginning of year 2018 + total assets in the end of year 2018)/ 2

= ($ 203,851 + $ 284,440)/2

= $ 244,145.50