Question

Using XYZ Company's income statement and balance sheet below calculate:

Current ratio

Quick ratio

Total debt to total assets

Operating margin

Profit margin

Return on assets

P/E ratio

Financial leverage

ROE

Use the DuPont equation and solve for ROE.

	20XX
Assets
Cash	$ 85,632
Accounts receivable	878,000
Inventories	1,716,480
Total current assets	$ 2,680,112
Gross fixed assets	1,197,160
Less accumulated depreciation	380,120
Net fixed assets	$ 817,040
Total assets	$ 3,497,152
Liabilities and Equity
Accounts payable	$ 436,800
Accruals	408,000
Notes payable	300,000
Total current liabilities	$ 1,144,800
Long-term debt	400,000
Common stock	1,721,176
Retained earnings	231,176
Total equity	$ 1,952,352
Total liabilities and equity	$ 3,497,152

Sales	$ 8,035,600
Cost of goods sold	6,875,992
Other expenses	550,000
Total operating costs excluding deprec. & amort.	$ 7,425,992
EBITDA	$ 609,608
Deprec. & amort.	115,960
Operating income (EBIT)	$ 493,648
Interest expense	71,008
Earnings before taxes	$ 422,640
Taxes (40%)	169,056
Net income	$ 253,584
EPS	$ 1.014
DPS	$ 0.220
Book value per share	$ 7.809
Stock price	$ 12.17
Shares outstanding	250,000
Tax rate	40.00%
Lease payments	30,000

Answer 1

a) Current Ratio : Totoal Current Assets / Total Current Liabilities

Current Assets = Cash + Accounts receivable + Inventories

= 85,632 + 878,000 + 1,716,480

= $ 2,680,112

Current Liabilities = Accounts payable + Accruals + Notes payable

= 436,800 + 408,000 + 300,000

= $ 1,144,800

Current Ratio = 2,680,112 / 1,144,800

= 2.34

b) Quick Ratio = Total Quick Assets / Total Current Liabilities

Quick Assets = Cash + Accounts receivable

= 85,632 + 878,000

= $ 963,632

Current Liabilities = Accounts payable + Accruals + Notes payable

= 436,800 + 408,000 + 300,000

= $ 1,144,800

Quick Ratio = 963,632 / 1,144,800

= 0.84

c) Total debt to total assets = Total Long term debt / Total Assets

Total long term debt = $ 400,000

Total Assets = $ 3,497,152

Total debt to total assets = 400,000 / 3,497,152

= 0.1144 or 11.44%

d) Operating margin = Total Operating Income / Net Sales

= 493,648 / 8,035,600

= 0.0614 or 6.14%

e) Profit Margin can be either Gross Profit margin or Net Profit Margin

i) Gross Profit Margin = (Sales - Cost of goods sold) / Sales

= (8,035,600 - 6,875,992) / 8,035,600

= 1,159,608 / 8,035,600

= 0.1443 or 14.43%

ii) Net Profit Margin = Net income / Sales

= 253,584 / 8,035,600

= 0.0316 or 3.16%

As there are multiple parts in the question, I have answered the first 5. Please post the others sepeartely.

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