3. [Financial Statements and Ratios] Bike-With-Us Corporation, a specialty bicycle parts replacement venture, was started last year by two former professional bicycle riders who had substantial competitive racing experience including competing in the Tour de France. The two entrepreneurs borrowed $50,000 from members of their families and each put up $30,000 in equity capital. Retail space was rented and $60,000 was spent for fixtures and store equipment. Following are the abbreviated income statement and balance sheet information for the Bike-With-Us Corporation after one complete year of operation.

BIKE-WITH-US CORPORATION

Sales $325,000

Operating Costs 285,000

Depreciation 10,000

Interest 5,000

Taxes 6,000

Cash $1,000

Receivables 30,000

Inventories 50,000

Fixed Assets, Net 50,000

Payables 11,000

Accruals 10,000

Long-Term Loan 50,000

Common Equity 60,000

A. Prepare an income statement and a balance sheet for the Bike-With-Us Corporation using only the information provided above.

B. Calculate the current ratio, quick ratio, and NWC-to-total-assets ratio.

C. Calculate the total-debt-to-total-assets ratio, debt-to-equity ratio, and interest coverage.

D.Calculate the net profit margin, sales-to-total-assets ratio, and the return on total assets.

A. Calculate the equity multiplier. Combine this calculation with the calculations in Part D to show the ROE model with its three components.