Ratio analysis. (LO 3)

Zap Electronics reported the following for the fiscal years ended January 31, 2007, and January \(31,2006\).

Assume all sales are on credit and the firm has no preferred stock outstanding. Calculate the following ratios.

a. Current ratio (for both years)

b. Accounts receivable turnover ratio (for 2007)

c. Inventory turnover ratio (for 2007)

d. Debt-to-equity ratio (for both years)

e. Return on equity ratio (for 2007)
Do any of these ratios suggest problems for the company?

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January 31 (in thousands) 2007 2006 Accounts receivable $ 36,184 $ 24,306 Inventory 106,754 113,875 Current assets 174,369 124,369 Current liabilities 71,616 68,001 Long-term liabilities 12,316 35,200 Shareholders' equity 121,851 198,935 Sales 712,855 580,223 Cost of goods sold 483,463 400,126 Interest expense 335 709 Net income 11,953 4,706