Question

Please calculate the ratios for 2017 from the following information:

	2017	2016	2015	Industry Standard
Quick Ratio		2.2	2.8	1.75
Gross Margin		0.55	0.7	0.7
Net Margin		0.22	0.32	0.24
Return on Equity		0.9	0.78	0.8

Peyton Approved
Balance Sheet
As of December 31, 2017
Assets					Liabilities and Owners' Equity
	Current Assets:					Current Liabilities:
	Cash	64,713.72				Accounts Payable	27,325.00
	Baking Supplies	27,850.00				Wages Payable	1,468.75
	Merchandise Inventory (FIFO)	25,750.00				Interest Payable	22,800.00
	Prepaid Rent	7,500.00				Total Current Liabilities		51,593.75
	Prepaid Insurance	400.00
	Office Supplies	250.00				Long Term Liabilities:
	Accounts Receivable	30,401.00				Notes Payable	21,000.00
	Total Current Assets		156,864.72			Loans Payable	10,000.00
						Total Long Term Liabilities:		31,000.00
						Total Liabilities:		82,593.75
	Long Term/Fixed Assets:
	Baking Equipment	17,000.00				Common Stock	30,000.00
	Accumulated Depreciation	5,928.58				Retained Earnings	63,642.39
			11,071.42
	Leasehold Improvements	10,000.00				Total Equity		93,642.39
	Accumulated Amortization	4,000.00	6,000.00
	Trademark		2,300.00
	Total Assets:		176,236.14			Total Liabilities & Equity		176,236.14

Peyton Approved
Statement of Retained Earnings
For Year Ending 12/31/2017
	Beginning Balance:		-
	plus Net Income		83,642.00
	less Dividends:		20,000.00
	Ending Balance:		63,642.00

Peyton Approved
Income Statement
For Year Ending 12/31/2017
	Bakery Sales		$ 335,675.00
	Merchandise Sales		$ 35,200.00
	Total Revenues		370,875.00
	Merchandise Cost of Goods Sold (FIFO)		15,760.00
	Baking Cost of Goods Sold		137,400.00
	Gross Profit		217,715.00
	Operating Expenses:
	Rent Expense		90,000.00
	Interest Expense		1,468.75
	Insurance Expense		2,000.00
	Depreciation Expense		2,642.86
	Amortization Expense		2,000.00
	Misc. Expense		2,780.00
	Office Supplies Expense		1,350.00
	Business License Expense		375.00
	Advertising Expense		5,200.00
	Wages Expense		22,800.00
	Telephone Expense		3,456.00
	Total Operating Expenses:		134,072.61
	Net Income		83,642.39

Answer 1

Answer to Q for 2017 Ratio

a) Quick Ratio = (Current Assets - Inventory)/Current Liablities

                      = (156,864.72-25,750)/51,593.75 ; 2.54

b) Gross Margin = Gross Profit/Total Revenue

                       = 217,715/370,875

                      =0.59

C) Net MArgin = Net income /Total Revenue

                     = 83,642.39/370,875

                   = 0.23

d) Return on Equity = Net income/ Total Equity

                            = 83,642.39/93,642.39

                            = 0.89