What are the answers to questions 9, 10, 11, and 12 and how do I do them?
Below is are balance and income numbers for three companies. Answer the questions below.
1 
2 
3 

Year 1 
Year 2 
Year 1 
Year 2 
Year 1 
Year 2 

Revenue 
5674 
5054 
176896 
124959 
179083 
186506 

COGS 
3442 
3066 
144924 
102374 
144249 
150228 

Gross Profit 
2232 
1988 
31972 
22585 
34834 
36277 

EBITDA 
1470 
658 
7962 
2712 
15990 
20527 

Taxes 
510 
218 
6522 
325 
4309 
11615 

Net Income 
960 
440 
1440 
2387 
11681 
8912 

Total Assets 
5255 
4681 
275936 
194921 
244587 
254725 

Equity 
3084 
3235 
13442 
40922 
89999 
134333 

Current Assets 
3145 
1550 
62923 
23413 
91387 
144135 

Current Liabilities 
873 
289 
53604 
6438 
85373 
48307 

Inventory 
221 
513 
10271 
2812 
13799 
81558 

LongTerm Debt 
1298 
1156 
208890 
147560 
69215 
72084 
● The balance sheet items may not balance perfectly (they may be out ~$1) due to rounding error.
● USE EXCEL to calculate the solutions and do the math – calculators may throw off your rounding
● Submit percentages as the percentage followed by two decimals. A number that appears as .04567 in excel should be
submitted as 4.57%.
● Responses will be marked correct if they are within 5% of the answer I calculated in Excel
(Questions on next page)
Which company has the best liquidity (highest current ratio) in Year 2?
Which company does the best job generating profits for shareholders in Year 2? (ROE)
Which company does the best job generating profits with its total investment in Year 2? (ROA)
Which company is the most leveraged (high longterm debt to equity) in Year 2?
Which company has the biggest current threat of being illiquid (lowest current ratio) in Year 2?
Which company saw the biggest increase in its net profit margin from Year 1 to Year 2 (or smallest decrease if NI all
negative)?
What is company 2's ROA in Year 2?
What is company 1's ROA in Year 1?
What is company 3's ROA in Year 2?
Which company has the highest gross margin in Year 2?
What is company 1's quick ratio in Year 1?
What is company 2's current ratio in Year 2?
What is company 3's net margin in Year 2?
What is company 2's inventory turnover in Year 2?
What is company 3's longterm debt to assets ratio in Year 1?
return on assets  net income / total assets  
company  1  2  3 
year 1  year 2  year 2  
net income  960  440  8912 
total assets  5255  4681  254725 
return on assets  0.18  0.09  0.03 
gross margin  gross profit / sales * 100  
company  1  2  3 
year 2  year 2  year 2  
gross profit  22585  1988  36277 
sales  124959  5054  186506 
gross margin  18.07%  39.34%  19.45% 
company 2 has highest gross profit  
quick ratio  (current assets  inventory)/total current liabilities  
company 1  year 1  
current assets  3145  
inventory  221  
total current liabilities  873  
quick ratio  3.35  
current ratio  current assets / current liabilities  
company 2  year 2  
current assets  1550  
current liabilities  289  
current ratio  5.36  
net margin  net income / sales * 100  
company 3  year 2  
net income  8912  
sales  186506  
net margin  4.78% 
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