Reference no: EM132068356

Below are numbers from a balance sheet and income statement. Construct the financial ratios requested below.

Sales 450512

Operating Costs 330307

Depreciation 10000

Interest 5000

Taxes 29408

Cash 1000

Receivables 30000

Inventories 55051

Fixed Assets, Net 50000

Payables 11000

Accrued Expenses 10000

Long-Term Loan 50000

Common Equity 65051

Assignment Notes:

? Use excel to solve these problem. It reduces rounding problems and is an important skill to have.

? Submitted answers should have two decimals places (i.e, 0.01). For things that are percentages, submit them as 2 whole numbers and two decimal places - 23.20%. The margin for error on the grade is based off a two-decimal place calculation.

? Definitions for the ratios are on the course site (towards the bottom). Be careful, ROA, for example has several different definitions in the popular press so stick to these definitions rather than something you find through Google.

? Accruals are debts that are soon due but have not yet been paid out - things like the salary owed to employees between pay periods show up as accruals

Assignment:

Prepare an income statement and a balance sheet for is company using the information provided.

Calculate:

1. Current ratio

2. Quick ratio

3. NWC-to-total-Assets (Working capital to assets)

4. Ratio of total debt and liabilities to total assets

5. Ratio of total debt and liabilities to shareholder's equity

6. Interest coverage

7. Net profit margin

8. Sales to total assets (Asset turnover)

9. Return on assets

10. Equity multiplier

11. Return on equity