Calculate and analyze financial ratios. (LO 3)

The following information was taken from the annual report of ROM.

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a. Calculate the following ratios for 2008:
1. Debt-to-equity ratio 2. Gross profit percentage 3. Current ratio 4. Acid-test ratio

b. What do the ratios indicate about the success of ROM? What additional information would be useful to help you analyze the overall performance of this company?

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At December 31, (in thousands) 2008 ASSETS: Current assets: Cash Accounts receivable Merchandise inventory Prepaid expenses Total current assets Plant and equipment: $ 1,220 3,112 966 149 5,447 Buildings, net 2,992 Equipment, net 1,045 Total plant and equipment 4,037 Total assets $ 9,484 LIABILITIES: Current liabilities: Accounts payable Notes payable Total current liabilities Long-term liabilities Total liabilities $ 1,685 1,100 2,785 2,000 4,785