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Calculate the firm's 2003 financial rations and then fill the preceding table.
- Essay length: 2994 words
- Submitted: 26/01/2004
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Question 1 a:
Calculate the firm's 2003 financial rations and then fill the preceding table.
Answer:
Current ratio = $1,531,181 ? $616,000
= 2.5
Quick ratio = (1,513,181 - $700,625) ? $616,000
= 1.3
Inventory turnover (times) = $3,704,000 ? $700,625
= 5.3
Average collection period = ($805,556 ? $5,075,000) x 360
= 57 days
Total asset turnover (times) = $5,075,000 ? $3,125,000
= 1.6
Debt ratio = ($1,781,250 ? $3,125,000) x 100
= 57%
Times interest earned ratio = $153,000 ? $93,000
= 1.6
Gross profit margin = ($1,371,000 ? $5,075,000) x 100
= 27%
Net profit margin = ($36,000 ? $5,075,000) x 100
= 0.71%
Return on total assets (ROA) = ($36,000 ? $3,125,000) x 100
= 1.2%
Return on common equity (ROE) = ($36,000 ? $1,343,750) x 100
= 2.7%
Price/earning (P/E) ratio = $11.38 ? $0.33
= 34.48
Market/book (M/B) ratio = $1,343,750 - $50,000
100,000
= $12.94
= $11.38
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