Return on sales, return on assets, return on common equity, times interest-earned ratio, and debt ratio (Learning Objective 2) 10–15 min.

The following information pertains to Joudi Company. The balance sheet shows total assets of $300,000, total liabilities of $150,000 for 2014. The income statement shows for 2014 net sales of $275,000, net income of $30,000, income from operations

$200,000, cost of goods sold $75,000, dividends of $5,000, and interest expense of

$25,000. Total assets and liabilities for 2013 were $280,000 and 135,000, respectively.

Compute the following ratios for 2014:

1. Debt ratio 2. Interest coverage ratio 3. Return on assets 4. Dividend payout 5. Return on equity AppendixLO1