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Calculate the firm's 2003 financial rations and then fill the preceding table.

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  • Essay length: 2994 words
  • Submitted: 26/01/2004
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University Degree Finance

The first 200 words of this essay...

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

=

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