Given the income statement and balance sheet for ABC Equipment Corporation, compute the ratios that
are also shown for the industry average. For each ratio, indicate whether ABC Equipment Corporation is
better (B) or worse (W) than the industry average. (SHOW YOUR WORK)
Sales (all credit) $4,500,000
Less: Cost of goods sold 3,000,000
Gross profit $1,500,000
Less: Selling and administrative expenses* 1,050,000
Operating profit (EBIT) $450,000
Less: Interest expense 56,250
Earnings before taxes (EBT) $393,750
Less taxes (25%) 98,438
Earnings after taxes (EAT) $295,312
Accounts receivable (net) 493,150
Total current assets $998,200
Net plant and equipment 1,066020
Total Assets $2,064,220
Current liabilities 450,400
Long-term liabilities 450,350
Total liabilities 900,750
Common stock 387,800
Retained earnings 775,670
Total stockholders' equity $1,163.470
Total liabilities and stockholders' equity $2,064,220
Net profit margin? better or worse?
Return on assets?better or worse?
Return on common equity?better or worse?
Days sales outstanding?better or worse?
Inventory turnover ratio?better or worse?
Total assets turnover?better or worse?
Current ratio?better or worse?
Quick ratio?better or worse?
Debt ratio?better or worse?
Times interest earned?better or worse?
Net profit margin - Worse Return on assets - Better Return on common equity - Better... View the full answer