1. Compute and interpret financial ratios that managers use to assess liquidity. 2. Compute and interpret financial ratios that managers use for asset management purposes. 3. Compute and interpret financial ratios that managers use for debt management purposes. \begin{tabular}{|c|c|c|c|c|c|c|} \hline 4 & A & B & c & E & F & A \\ \hline 1 & \multicolumn{5}{|c|}{ Recent financial statements for Zimmer, Inc. are as follows: } & \\ \hline 2 & \multicolumn{3}{|c|}{ Zimmer Company } & \multicolumn{2}{|l|}{ Zimmer Company } & \\ \hline 3 & \multicolumn{3}{|c|}{ Comparative Balance Sheet } & \multicolumn{2}{|l|}{ Income Statement } & \\ \hline 4 & & This Year & Last Year & & This Year & \\ \hline 5 & Assets & & & & & \\ \hline 6 & Current assets: & & & & & \\ \hline 7 & Cash & 360,000 & 310,000 & Sales (all on account) & $4,980,000 & \\ \hline 8 & Marketable securitics & 220,000 & 80,000 & Cost of goods sold & 2,988,000 & \\ \hline 9 & Accounts receivable, net & 775,000 & 700,000 & Gross margin & 1,992,000 & \\ \hline 10 & Inventory & 925,000 & 750,000 & Selling and administrative expenses & & \\ \hline 11 & Other current assets & 355,000 & 195,000 & Operating expenses & 985,500 & \\ \hline 12 & Total current assets & 2,635,000 & 2,035,000 & Depreciation and amortization & 410,500 & \\ \hline 13 & Plant and equipment, net & 1,975,000 & 1,800,000 & General and administrative expenses & 150,000 & \\ \hline 14 & Other assets & 75,000 & 100,000 & Total selling and administrative expenses & 1,546,000 & \\ \hline 15 & Total assets & 4,685,000 & $3,935,000 & Net operating income & 446,000 & \\ \hline 16 & Liabilities and Stockholders' Equity & & 1 & Interest expense & 60,000 & \\ \hline 17 & Current Liabilities: & & & Net income before taxes & 386,000 & \\ \hline 18 & Accounts payable & 250,000 & 225,000 & Income taxes & 135.100 & \\ \hline 19 & Short-term bank loans & 750,000 & 600,000 & Net income & 5250,900 & \\ \hline 20 & Accrued payables & 550,000 & 395,000 & & & \\ \hline 21 & Other current liabilitics & 275,000 & 223,400 & Additional information: & & \\ \hline 22 & Total current liabilities & 1,825,000 & 1,443,400 & Dividend per share paid in current year & (3) 1.00 & \\ \hline 23 & Bonds payable, 10% & 575,000 & 400,000 & Market price of shares at year end & 42.00 & \\ \hline \end{tabular} Total liabilities Stockholders' equity Common stock Retained carnings Total stockholder's' equity Total liabilities and stockholders' equity B C F A 2,400,000 1,843,400 Par value of common stock per share 20,00 Required: Compute the following ratios for the current year only: Gross margin percentage Current ratio (rounded to two decimal places) Acid-test ratio (rounded to two decimal places) Accounts receivable tumover (rounded to two decimal places) Average collection period (rounded to the nearest whole day) Inventory turnover ratio (rounded to two decimal places) Average sales period (rounded to the nearest whole day) Debt-to-equity ratio (rounded to two decimal places) Times interest earned (rounded to two decimal places) Book value per share (rounded to two decimal places) Farnings per share (rounded to two decimal places) Dividend payout ratio (rounded to three decimal places) Dividend yield ratio (rounded to three decimal places) Price-carnings ratio (rounded to two decimal places)
