There are no universally accepted definitions of financial ratios, but five of the following ratios are clearly incorrect. Substitute the correct definitions.

a. Debt–equity ratio (long-term debt value of leases)/(long-term debt value of leases equity)

b. Return on equity (EBITtax)/average equity

c. Profit margin net income/sales

d. Days in inventory sales/(inventory/365)

e. Current ratio current liabilities/current assets

f. Sales-to-net-working-capital average sales/average net working capital g. Quick ratio (current assets inventories)/current liabilities h. Times-interest-earned interest earned long-term debt.

AppendixLO1

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Assots Current assets: Cash and marketable securities Accounts receivable Inventories Other current assets End of Year Start of Year Balance Sheet 402 254 1,039 861 987 856 360 269 2,787 2,239 Total current assets Fixed assets: Tangible fixed assets Property, plant, and equipment 2,394 2,113 Less accumulated depreciation 1,351 1,232 Not tangible fixed assets 1,043 881 Long-term investments 24 22 Other long-term assets 1,157 984 Total assets 5,011 4,126 Liabilities and Shareholders' Equity Current liabilities: Debt due for repayment 119 60 Accounts payable 1,581 1,440 Total current liabilities 1,699 1,501 Long-term debt Other long-term liabilities Total liabilities 1,078 1,028 581 398 Total shareholders' equity Total liabilities and shareholders' equity Not sales Cost of goods sold Selling, general, and administrative expenses 3,358 2,927 1,653 1,199 5,011 4,126 Income Statement 7,911 1,997 4,852 251 811 67 744 260 10 474 Depreciation Earnings before interest and taxes (EBIT) Interest expense Taxable income Tax Minority interest Not income Dividends 107 Addition to retained earnings 367