In its closing financial statements for its first year in business, ABC Enterpri
ID: 2775012 • Letter: I
Question
In its closing financial statements for its first year in business, ABC Enterprises, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of $3,408, accounts payable of $700, short-term notes payable of $740, long-term liabilities of $1,100, common stock of $1,160, retained earnings of $1,620, net sales of $2,768, cost of goods sold of $1,210, depreciation of $360, interest expense of $160, taxes of $312, addition to retained earnings of $508, and dividends paid of $218.
Calculate the following:
Return on equity
Return on total assets
Net profit margin
Gross profit margin
Sales to asset ration
Current Ratio
Total-debt-total-asset ratio
Debt-to-equity ratio
Equity multiplier
Interest coverage ratio
Explanation / Answer
Income Statement Net Sales 2768 COGS 1210 Gross Profit 1558 Interest Expense 160 Depriciation 360 tax 312 Net Profit 726 Balance Sheet Cash 242 A/c Payable A/c Receivable 850 S.T Liabilities Inventories 820 L.T Debt Fixed Assets 3408 Equity Reatined earnings Total 5320 Total Return on Equity 26.12% Net Profit/(Equity + Retained Earnings) Return on total Assets 13.65% net Profit/Total Assets Net Profit Margin 26.23% Net Profit/Net Sales Gross Profit 56.29% Gross Profit/Net Sales Sales to Assets 0.520301 Net Sales/Total Assets Current Ratio 0.606667 (Cash + A/c Receivable)/(A/c Payable + S.T liabilities) Total Debt/Total Assets 0.479135 (A/c Payable+ S.T Liabilties + L.T Debt) Debt to Equity 0.916906 (A/c Payable+ S.T Liabilties + L.T Debt)/(Equity + Retained Earnings) Equity Multiplier 1.916906 1+(Debt/Equity) Interest Coverage 0.102696 Interest Expense/Gross Profit