Compute working capital and current ratio liquidity measures

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Reference no: EM13913825

Business application- A company's simplified balance sheet and income state- ment follow.

Balance Sheet December 31, 2014
Assets			Liabilities
Current assets	$ 50,000	Current liabilities		$ 20,000
Investments	10,000	Long-term liabilities		30,000
Property, plant, and equipment	146,500	Total liabilities		$ 50,000
Intangible assets	13,500	Stockholders' equity
		Stockholders' equity		170,000
Total assets	$220,000	Total liabilities and stockholders' equity		$220,000

Income Statement For the Year ended December 31, 2014
Net sales	$410,000
Cost of goods sold	250,000
Gross margin	$160,000
Operating expenses	135,000
Net income	$ 25,000

Total assets and stockholders' equity at the beginning of 2014 were $180,000 and $140,000, respectively.

1. Compute the following liquidity measures: (a) working capital and (b) current ratio. (Round to one decimal place.)

2. Compute the following profitability measures: (a) profit margin, (b) asset turnover, (c) return on assets, (d) debt to equity ratio, and (e) return on equity. (Round to one decimal place.)

Reference no: EM13913825

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