Solve the problem below calculate the ratios interpret the

Reference no: EM13396122

Solve the problem below, calculate the ratios, interpret the results against the industry average, and fill in the table on the worksheet. Then,provide an analysis of how those results can be used by the business to improve its performance.

Balance Sheet as of December 31, 2010
Gary and Company
Cash	$45	Accounts payables	$45
Receivables	66	Notes payables	45
Inventory	159	Other current liabilities	21
Marketable securities	33	Total current liabilities	$111
Total current assets	$303
Net fixed assets	147	Long Term Liabilities
Total Assets	$450	Long-term debt	24
		Total Liabilities	$135

		Owners Equity
		Common stock	$114
		Retained earnings	201
		Total stockholders' equity	315
		Total liabilities and equity	$450

Income Statement Year 2010

Net sales	$795
Cost of goods sold	660
Gross profit	135
Selling expenses	73.5
Depreciation	12
EBIT	49.5
Interest expense	4.5
EBT	45
Taxes (40%)	18
Net income	27

1. Calculate the following ratios AND interpret the result against the industry average:

Ratio	Your Answer	Industry Average	Your Interpretation (Good-Fair-Low-Poor)
Profit margin on sales		3%
Return on assets		9%
Receivable turnover		1.6X
Inventory turnover		10X
Fixed asset turnover		2X
Total asset turnover		3X
Current ratio		2X
Quick ratio		1.5X
Times interest earned		7X

2. Analysis:

Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers

Reference no: EM13396122

Questions Cloud

The effects of financial planning governance and ethical : the effects of financial planninggovernance and ethical issues in modern economies.identify current policies or

Clculate population size which is compatible with maximum : assume that the relationship between the growth of a fish population and the population size can be expressed as g 4p

Discuss the companyrsquos advertising strategy and how it : continuing to build a marketing plan this assignment focuses on imc and customer satisfaction for your product and

What happen to the medullary osmotic gradient whenever adh : 1 what happen to the medullary osmotic gradient when adh is secreed? how is the gradient reestablished?2 why does

Solve the problem below calculate the ratios interpret the : solve the problem below calculate the ratios interpret the results against the industry average and fill in the table

Which of the financial ratios would you look at first and : if youre the marketing manager of a large corporation which of these financial ratios would you look at first and why?

A typical capillary consists of a high-pressure arterial : 1. a typical capillary has a high-pressure arterial and a low-pressure venous end. how does a glomerular capillary

One aspect relating to the values and importance of : there are a variety of communication modalities available to health care consumers and health care providers. these

Plants respond to challenges by fungal and bacterial : plants respond to challenges by bacterial and fungal pathogens in a variety of ways. explain the difference between

User Account

All Pages