Question

Income Statement                                        &nbs

Income Statement                                           Balance Sheet

Sales $20,000,000   Assets:

Cost of Goods Sold 8,000,000 Cash $ 5,000,000

12,000,000 Marketable Securities 12,500,000

Selling and Administrative 1,600,000 Accounts Receivable, net 2,500,000

Depreciation 3,000,000 Inventory 30,000,000

7,400,000 Prepaid Expenses 5,000,000

Interest 2,000,000 Plant & Equipment 30,000,000

5,400,000                

Taxes (40%) 2,160,000   Total Assets 85,000,000

3,240,000                

Common Stock Div. 600,000 Liabilities and Equity:

$2,640,000 Accounts Payable $20,000,000

Notes Payable                 5,000,000

Accrued Expenses          5,000,000

Bonds                            25,000,000

Common Stock                5,000,000

Capital in Excess of Par 10,000,000

Retained Earnings          15,000,000

                                                                        Total Liabilities and Equity

   $85,000,000

Shares outstanding of common stock = 1,000,000

Market price of common stock = $18.

Please answer the following questions using the table above:

1.        The Current Ratio is:

2.         The Net Profit margin is:

3.         The Quick Ratio is:

4.         The Times Interest Earned ratio is:

5.         The Earnings Per Share is:

6.         The Gross Profit Margin is:

7.         The Total Debt to Total Asset ratio is:

8.         Return on Assets ratio is:

9.         The Total Asset Turnover ratio is:

10.       The Operating Profit Margin is:

11.       The Average Collection Period (365 day year) is:

12.       The Market to Book ratio is:

13.       The Debt to Equity ratio is:

14.       The Inventory Turnover ratio is:

15.       The Return on Equity is:

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Homework Answers

Answer #1

(1) Current Assets = Total Assets - Plant and Equipment = 85 - 30 = $ 55 million

Current Liability = Accounts Payable + Notes Payable + Accrued Expenses = 20 + 5 + 5 = $ 30 million

Current Ratio = 55 / 30 = 1.833

(2) Net Profit Margin = Net Income / Sales = (3.24 / 20) x 100 = 16.2 %

(3) Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities = (5+12.5+2.5) / 30 = (20/30) = 0.66

(4) EBIT = $ 7.4 million and Interest Expense = $ 2 million

Times Interest Earned Ratio (Interest Coverage Ratio) = 7.4 / 2 = 3.7

NOTE: Please raise seprate queries for answers to the remaining subparts.

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