Question

FOR 2020 find the following. Please show work, so that I can complete the prior years ratios.

1). Current Ratio

2). Debt Ratio

3). Profit Margin

4). Return on Total Assets

A brief comment for each on what they represent as analysis of the company.

INCOME STATEMENTBALANCE SHEET

Period Ending:	1/31/2020	1/31/2019	1/31/2018	1/31/2017
Total Revenue	$2,358,926	$1,803,010	$1,309,132	$943,564
Cost of Revenue	$429,788	$344,676	$256,409	$191,053
Gross Profit	$1,929,138	$1,458,334	$1,052,723	$752,511
Operating Expenses
Research and Development	$619,800	$441,969	$301,114	$295,850
Sales, General and Admin.	$1,596,475	$1,267,538	$937,019	$792,763
Non-Recurring Items	$0	$0	$0	$0
Other Operating Items	$0	$0	$0	$0
Operating Income	-$287,137	-$251,173	-$185,410	-$336,102
Add'l income/expense items	$51,735	$29,945	$5,343	$2,698
Earnings Before Interest and Tax	-$235,402	-$221,228	-$180,067	-$333,404
Interest Expense	$96,249	$41,963	$8,794	$8,549
Earnings Before Tax	-$331,651	-$263,191	-$188,861	-$341,953
Income Tax	$5,017	$12,386	$1,357	$5,507
Minority Interest	$0	$0	$0	$0
Equity Earnings/Loss Unconsolidated Subsidiary	$0	$0	$0	$0
Net Income-Cont. Operations	-$336,668	-$275,577	-$190,218	-$347,460
Net Income	-$336,668	-$275,577	-$190,218	-$347,460
Net Income Applicable to Common Shareholders	-$336,668	-$275,577	-$190,218	-$347,460

Balance Sheet

Period Ending:	1/31/2020	1/31/2019	1/31/2018	1/31/2017
Current Assets
Cash and Cash Equivalents	$778,653	$1,876,165	$545,947	$421,346
Short-Term Investments	$976,508	$881,220	$619,203	$662,096
Net Receivables	$838,743	$469,658	$396,413	$238,281
Inventory	$0	$0	$0	$0
Other Current Assets	$228,911	$151,420	$122,472	$38,650
Total Current Assets	$2,822,815	$3,378,463	$1,684,035	$1,360,373
Long-Term Assets
Long-Term Investments	$504,304	$266,059	$5,375	$5,000
Fixed Assets	$424,014	$158,276	$160,880	$166,395
Goodwill	$1,292,840	$503,388	$161,382	$124,642
Intangible Assets	$238,415	$91,622	$48,142	$37,713
Other Assets	$68,093	$37,669	$41,711	$24,423
Deferred Asset Charges	$88,990	$64,766	$37,920	$0
Total Assets	$5,439,471	$4,500,243	$2,139,445	$1,718,546
Current Liabilities
Accounts Payable	$482,919	$372,120	$241,036	$188,666
Short-Term Debt / Current Portion of Long-Term Debt	$0	$0	$0	$0
Other Current Liabilities	$829,377	$673,018	$489,913	$478,707
Total Current Liabilities	$1,312,296	$1,045,138	$730,949	$667,373
Long-Term Debt	$1,714,630	$1,634,474	$0	$0
Other Liabilities	$236,284	$95,245	$98,383	$99,260
Deferred Liability Charges	$176,832	$204,929	$178,792	$146,752
Misc. Stocks	$0	$0	$0	$0
Minority Interest	$0	$0	$0	$0
Total Liabilities	$3,440,042	$2,979,786	$1,008,124	$913,385
Stock Holders Equity
Common Stocks	$157	$149	$143	$137
Capital Surplus	-$1,561,471	-$1,232,044	-$955,871	-$1,020,784
Retained Earnings	$0	$0	$0	$0
Treasury Stock	$3,566,055	$2,754,858	$2,086,893	$1,828,821
Other Equity	-$5,312	-$2,506	$156	-$3,013
Total Equity	$1,999,429	$1,520,457	$1,131,321	$805,161
Total Liabilities & Equity	$5,439,471	$4,500,243	$2,139,445	$1,718,546

Liquidity Ratios
Current Ratio	215%	323%	230%	204%
Quick Ratio	215%	323%	230%	204%
Cash Ratio	134%	264%	159%	162%
Profitability Ratios
Gross Margin	82%	81%	80%	80%
Operating Margin	0%	0%	0%	0%
Pre-Tax Margin	0%	0%	0%	0%
Profit Margin	0%	0%	0%	0%
Pre-Tax ROE	0%	0%	0%	0%
After Tax ROE	0%	0%	0%	0%

Answer 1

Q1:

current ratio= current asset/current liabilities----- shows the liquidity of a company. Higher the value more liquid a company is.

current ratio=2,822,815/1,312,296 =2.15

Q2:

Debt ratio= (total long term& short term debt)/total asset ----- (only interest bearing liabilities are considered; shows the leverage dependency of a firm, higher debt ratio increases the risk of a firm)

debt ratio= 1,714,630/5,439,471 =.3152

Q3:

Profit margin=net income/sales ---- shows the profitability of a firm ; higher value shows better profitablity

profit margin= -336,668/2358926 = -14.27%  

Q4:

Return on Asset= net income/total assets ----- shows the profitability of a firm in terms of its assets; higher the better;

ROA= -336,668/5,439,471 = -6.1389%

note: All ratios calculated based on 2020 data