I need to understand how to calculate the ratios at the end

Instructions:

1. Calculate the ratios at the with the information given.

1. 2 Write one sentence next to each ratio you calculated in Question 1 describing what that number means in words.

• For example, if you calculate the average collection period as 40, you should write something like "on average, it takes 40 days for Freemont Corporation to collect its accounts receivable."

Balance Sheet ($000)

Assets

Cash $1,500

Marketable securities $2,500

Accountsreceivable $15,000

Inventory $33,000

Total current assets $52,000

Fixed assets (net) $35,000

Total assets $87,000

Income Statement ($000)

Sales (all on credit) $130,000

Cost of sales $103,000

Gross margin $27,000

Operating expenses* $16,000

EBIT $11,000

Interest $3,000

EBT $8,000

Income Tax $3,000

EAT $5,000

* includes 200 in lease payments

Liabilities and Equity

Accounts payable $12,500

Notes payable $12,500

Total current liabilities $25,000

Long-term debt $22,000

Total liabilities $47,000

Common stock (par value) $5,000

Contributed capital in excess of par $18,000

Retained earnings $17,000

Total stockholders' equity $40,000

Total liabilities and stockholders' equity$87,000

Other Info

Stock Price $9.50

Book value/share $8.00

Number of shares 5,000 in thousands

Ratios Calculation

Liquidity ?

Current ?

Quick ?

Asset Management

Average collection period ?

Inventory turnover ?

Fixed-asset turnover ?

Total asset turnover ?

Financial Leverage

Debt ?

Debt-to-equity ?

Times interest earned ?

Fixed charge coverage ?

Profitability

Gross profit margin ?

Net profit margin ?

Return on investment ?

Return on stockholders' equity ?

Market-based

Price-to earnings ?

Market price-to-book ?

Answer rating: 100% (QA)

To calculate the ratios well use the information provided in the balance sheet and income statement Here are the calculations for each ratio Liquidity Current Ratio Total Current Assets Total Current ... View the full answer