Below are numbers from a balance sheet and income statement. Construct the financial ratios requested below....

Below are numbers from a balance sheet and income statement. Construct the financial ratios
requested below.

Sales 443555
Operating Costs 326133
Depreciation 10000
Interest Expense 5000
Tax Expense 29408
Cash 1000
Receivables 30000
Inventories 54355
Fixed Assets, Net 50000
Payables 11000
Accrued Expenses 10000
Long-Term Loan 50000
Common Equity 64355

Prepare an income statement and a balance sheet for is company using the information provided.
Calculate:
1. Current ratio
2. Quick ratio
3. NWC-to-total-Assets (Working capital to assets)
4. Ratio of total debt and liabilities to total assets
5. Ratio of total debt and liabilities to shareholder’s equity
6. Interest coverage
7. Net profit margin
8. Sales to total assets (Asset turnover)
9. Return on assets
10. Equity multiplier
11. Return on equity

Solutions

Expert Solution

	Current assets
	Cash	1000
	Accounts receivable	30000
	Inventories	54355
	Total current assets	85355
	Current liabilities
	Accounts payable	11000
	Accrued expense	10000
	Total current liabilities	21000

1	Current ratio = Current assets / current liabilities
	Current ratio	4.06	(85355/21000)

2	Current assets	85355
Less	Inventories	54355
	Quick assets	31000
	Quick ratio = Quick assets / current liabilities	1.48	(31000/21000)

3	Current assets	85355
	Current liabilities	21000
	Working capital	64355

	Working capital	64355
	Total assets	135355
	Working capital to total assets = Net working capital / total assets	0.48	(64355/135355)

4	Total debt	71000
	Total assets	135355
	Total debt to total assets = Total debt / total assets	0.52	(71000/135355)

5	Total debt	71000
	Shareholders equity	64355
	Total debt to shareholders equity = Total debts / shareholders equity	1.10	(71000/64355)

ekkarill92 answered 1 year ago

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