Calculate sharpe ratio for both quantum portfolio

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Reference no: EM133062688

Use the information below to solve the problem. Calculate the Sharpe Ratio for both the Quantum portfolio and the Market.  Did the Quantum portfolio outperform the market on this basis? Please use 2% for the risk free rate. 

Quantum Portfolio                           Market Return

Return 14%                                         Return 12%

Standard Deviation 12%                     Standard Deviation 10%

Beta .7                                                 Beta 1.0

Income Statement

2020       

 

 

 

 

Sales

5,500,000 

 

Cost of goods sold

2,850,000 

 

Depreciation

280,000 

 

Selling & admin expenses

1,500,000 

 

EBIT

870,000 

 

Interest Expense

130,000 

 

Taxable income

740,000 

 

Taxes

330,000

 

Net income

410,000

 

 

 

 

Balance Sheet, year-end

2020

2019

 

 

 

Assets

 

 

Cash

50,000             

40,000 

Accounts receivable

660,000 

690,000 

Inventory

490,000 

480,000 

     Total current assets

1,200,000 

1,210,000 

Fixed Assets

3,100,000        

2,800,000 

     Total assets

4,300,000 

4,010,000 

 


 

Liabilities and shareholders' equity

 

 

Accounts payable

340,000 

450,000 

Short-term debt

480,000 

550,000 

     Total current liabilities

820,000 

1,000,000 

Long-term bonds

2,520,000 

2,200,000 

     Total liabilities

3,340,000 

3,200,000 

 

 

 

Common Stock

310,000 

310,000 

Retained earnings

650,000 

500,000 

      Total shareholders' equity

960,000 

810,000 

            Total liabilities and

 

 

             shareholders' equity

4,300,000 

4,010,000 

Reference no: EM133062688

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