Question

The balance sheet and income statement shown below are for James Madison Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. (SHOW YOUR WORK)

Balance Sheet (Millions of $)
Assets	2019
Cash and securities	$ 1,554.0
Accounts receivable	9,660.0
Inventories	13,440.0
Total current assets	$24,654.0
Net plant and equipment	17,346.0
Total assets	$42,000.0
Liabilities and Equity
Accounts payable	$ 7,980.0
Notes payable	5,880.0
Accruals	4,620.0
Total current liabilities	$18,480.0
Long-term bonds	10,920.0
Total debt	$29,400.0
Common stock	3,360.0
Retained earnings	9,240.0
Total common equity	$12,600.0
Total liabilities and equity	$42,000.0
Income Statement (Millions of $)	2019
Net sales	$58,800.0
Operating costs except depr'n	$54,978.0
Depreciation	$ 1,029.0
Earnings bef int and taxes (EBIT)	$ 2,793.0
Less interest	1,050.0
Earnings before taxes (EBT)	$ 1,743.0
Taxes	$     610.1
Net income	$ 1,133.0
Other data:
Shares outstanding (millions)	175.00
Common dividends	$   509.83
Int rate on notes payable & L-T bonds	6.25%
Federal plus state income tax rate	35%
Year-end stock price	$77.69

17. What is the firm's current ratio? (SHOW YOUR WORK)
18. What is the firm's quick ratio? (SHOW YOUR WORK)
19. What is the firm's days sales outstanding? Assume a 360-day year for this calculation. (SHOW YOUR WORK)
20. What is the firm's EBITDA coverage? (SHOW YOUR WORK)
21. What is the firm's ROE? (SHOW YOUR WORK)
22. What is the firm's ROA? (SHOW YOUR WORK)

Answer 1

1) Current ratio = Current Assets/Current liabilities

= $24,654/$18,480

Current ratio = 1.33 times

2). Quick ratio = (Current Assets - Inventories)/Current liabilities

Quick ratio = ($24,654 - $13,440)/$18,480

Quick ratio = 0.61 times

3). Days Sales Outstanding = (Average receivables/net Sales)*360

Days Sales Outstanding = ($9660/$58,800)*360

Days Sales Outstanding = 59.14 days

4) EBITDA coverage = EBITDA/Interest Expenses

where, EBITDA = EBIT + Depreciation = $2793 + $1029 = $3822

EBITDA coverage = $3822/$1050 = 3.64 times

5) Return on Equity(ROE) = Net income/Total equity

ROE = $1133/$12,600

ROE = 8.99%

6) Return on Asset(ROA) = Net income/Total Assets

ROA = $1133/$42,000

ROA = 2.70%

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating