10 5 The financial statements for Royale and Cavalier companies are summarized here: Balance Sheet points Cash Accounts Receivable, Net Inventory Equipment, Net Other Assets eBook Print Total Assets Current Liabilities Notes Payable (long-term) Common Stock (par $20) Royale Company Cavalier Company $ 30,000 60,000 $ 50,000 21,000 120,000 560,000 145,000 $ 915,000 $ 130,000 200,000 485,000 55,000 45,000 $ 815,000 485,000 245,000 $ 85,000 35,000 170,000 51,000 $ 327,000 $ 25,000 65,000 215,000 9,000 13,000 $ 327,000 $ 295,000 155,000 100,000 $ 40,000 Additional Paid-In Capital Retained Earnings Total Liabilities and Stockholders' Equity $ 915,000 References Income Statement Sales Revenue Cost of Goods Sold Other Expenses Net Income Other Data Per share price at end of year Accounts Receivable, Net Selected Data from Previous Year Notes Payable (long-term) Total Stockholders' Equity Equipment, Net Inventory $ 20.00 $ 52,000 200,000 560,000 100,000 585,000 $ 15.00 $ 19,000 65,000 170,000 43,000 237,000 These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $80,000 cash and Cavalier Company is asking for $35,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavalier has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account. Required: 1. Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) Ratio Royale Company Cavalier Company Tests of Profitability 1. Net Profit Margin % % % % 2. Gross Profit Percentage 3. Fixed Asset Turnover 4. Return on Equity 5. Earnings per Share 6. Price/Earnings Ratio Tests of Liquidity: 7. Receivables Turnover 7. Days to Collect 8. Inventory Turnover 8. Days to Sell 9. Current Ratio Tests of Solvency: 10. Debt-to-Assets % %