10: Application of Financial Ratios Used to Measure Profitability The income statement of Garnet Mfg. Corp. for 2018 shows the following: Sales, net Net credit sales Cost of goods sold Cost of goods manufactured Net credit purchases Raw materials used Net income Total operating expenses Depreciation Net income P 700,000 15,000 400,000 410,000 150,000 225,000 90,000 212,500 20,000 90,000 The balance sheet figures as of December 31, 2017 and 2018 are as follows: December 31 2017 P12,500 17,500 10,000 2018 P 25,000 28,750 20,000 Cash Marketable securities Accounts receivable, net Inventories: Finished goods Work in process Raw materials Prepaid expenses Total current assets Investments Plant, property and equipment, net 25,000 17,500 10,000 2,500 P95,000 37,500 117,500 35,000 22,500 15,000 3,750 P 150,000 37,500 187,500 Total assets P250,000 P375,000 Accounts payable Notes payable Total current liabilities Long-term debt Total liabilities 5% Preferred stock, par P 50 Common stock, par P 100 Premium on preferred stock Premium on common stock Retained earnings Total stockholder's equity Total liabilities and stockholder's equity P 37,500 12,500 P 50,000 75,000 125,000 25,000 50,000 7,500 10,000 32,500 P125,000 P250,000 P 80,000 20,000 P100,000 75,000 175,000 35,000 65,000 15,000 12,500 72,500 P200,000 P375,000 Market price per share of common stock is P 682.70. (One year= 360 days) Instruction: Compute for the following ratios: a. 16. Application of Ratios Used in Determining Long-term Stability ppear Using the data given for Garnet Mfg. Corp. (see Exercise 10), compute for the following ratios: Debt/equity ratio b. Equity ratio Debt ratio d. Fixed assets to total owners' equity Fixed assets to total long-term liabilities f.Plant turnover 8 Book value per share C. e