1. (Common-size financial statements) The Solisto Construction Company expects to have total sales next year totaling $15,000,000. In addition, the firm pays taxes at 35 percent and will owe $300,000 in interest expense. Based on last years operations, the firms management predicts that its cost of goods sold will be 60 percent of sales and operating expenses will total 30 percent. What is your estimate of the firms net income (after taxes) for the coming year?

2. (Financial ratios) The balance sheet and income statement for the R& H Mfg. Company are as follows:

R& H Mfg., Inc. Balance Sheet ($000)
Cash	$500
Accounts receivable	2,000
Inventories	1,000
Current assets	3,500
Net fixed assets	4,500
Total assets	$8,000
Accounts payable	$1,100
Accrued expenses	600
Short-term notes payable	300
Current liabilities	$2,000
Long-term debt	2,000
Owners equity	4,000
Total liabilities and owners equity	$8,000

R& H Mfg., Inc. Income Statement ($000)
Net sales (all credit)	$8,000
Cost of goods sold	-3,300
Gross profit	$4,700
Operating expenses (includes $500 depreciation)	-3,000
Net operating income	$1,700
Interest expense	-367
Earnings before taxes	$1,333
Income taxes (40%)	-533
Net income	$ 800

Calculate the following ratios:

Current ratio

Times interest earned

Inventory turnover

Total asset turnover

Operating profit margin

Operating return on assets

Debt ratio

Average collection period

Fixed asset turnover

Return on equity