Handout_Qs_Ratios

Handout_Qs_Ratios - 5-6 The balance sheet and income...

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5-6 The balance sheet and income statement for the ABC Production Co. are as follows: Balance Sheet ($000) Cash 500 Accounts receivable 2000 Inventories 1000 Current assets 3500 Net fixed assets 4500 Total assets 8000 Accounts payable 1100 Accrued expenses 600 Short-term notes payable 300 Current liabilities 2000 Long-term debt 2000 Equity 4000 Total liabilities and equity 8000 Income statement ($000) Net sales (all credit) 8000 Cost of goods sold (3300) Gross profit 4700 Operating expenses (3000) Net operating income (EBIT) 1700 Interest expense (367) Earnings before tax 1333 Income taxes (40%) (533) Net income 800 Calculate the following ratios: Current ratio Gross profit margin Debt ratio Operating profit margin Times interest earned Net profit margin Total asset turnover Operating return on total assets Fixed asset turnover Return on total assets Average collection period Return on equity Inventory turnover
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5-11 Agro Ltd has recently applied for a loan from the Western Bank to be used to expand the firm’s inventory of soil pipe used in construction and agriculture. This expansion
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  • Three '11
  • 1212
  • Generally Accepted Accounting Principles, operating profit margin, profit Operating expenses, Total assets Accounts, turnover Average collection

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