70.2K

Verified Solution

Link Copied!

Calculate the financial ratios below for the year 2014. Use the financial information given in the income statement and balance sheet below.
					Industry Average
Financial Ratios		2012	2013	2014	2007
Current ratio		1.71X	1.65X		1.70X
Quick ratio		.92X	.89X		.95X
Average collection period		60 days	60 days		65 days
Inventory turnover		4.20X	3.90X		4.50X
Fixed asset turnover		3.20X	3.33X		3.00X
Total asset turnover		1.40X	1.35X		1.37X
Debt ratio		59.20%	61.00%		60.00%
Times interest earned		4.20X	3.70X		4.75X
Gross profit margin		25.00%	23.00%		22.50%
Operating profit margin		12.50%	12.70%		12.50%
Net profit margin		6.10%	6.00%		6.50%
Return on total assets		8.54%	8.10%		8.91%
Return on equity		20.93%	20.74%		22.28%
Income Statement for			Balance Sheet
Year Ended 12/31/14			at 12/31/14
Sales	$1,500,000		Cash		$125,000
Cost of goods sold		1,200,000	Accounts receivable		275,000
Gross Profit		$300,000	Inventory		325,000
Operating expenses		100,000	Current Assets		$725,000
Operating profit		$200,000	Fixed assets (net)		$420,000
Interest expense		72,000	Total Assets		$1,145,000
Earnings before tax		128,000	Accounts payable		$150,000
Income tax (0.4)		51,200	Notes payable		225,000
			Accrued liabilities		100,000
			Current Liabilities		475,000
			Long-term debt		400,000
			Total Liabilities		$875,000
			Equity		270,000
Net Income		$76,800	Total Liabilities & Equity		$1,145,000

Answer & Explanation Solved by verified expert

See Answer