ABC Company Balance Sheet December 31, 2014 and December 31, 2015 2014 2015

2014 2015

Assets Current Assets Cash $120,000,000 $88,000,000

Accounts Receivable $224,000,000 $192,000,000

Inventory $424,000,000 $368,000,000

Total: $768,000,000 $648,000,000

Fixed Assets:

Net Plant & Equipment $5,228,000,000 $5,354,000,000

Total Assets $5,996,000,000 $6,002,000,000

Liabilities & Owners Equity:

Current Liabilities

Accounts Payable $124,000,000 $144,000,000

Notes Payable $1,412,000,000 $1,039,000,000

Total $1,536,000,000 $1,183,000,000

Long Term Debt $1,804,000,000 $2,077,000,000

Owners Equity:

Common Stock & Paid In Surplus $300,000,000 $300,000,000

Accumulated Retained Earnings $2,356,000,000 $2,442,000,000

Total $2,656,000,000 $2,742,000,000

Total Liabilities & Owners Equity $5,996,000,000 $6,002,000,000

ABC Company 2015 Income Statement

Sales $3,756,000,000

Cost of Goods Sold $2,453,000,000

Depreciation $490,000,000

EBIT $813,000,000

Interest Paid $613,000,000

Taxable Income $200,000,000

Taxes $68,000,000

Net Income $132,000,000

Dividends $46,000,000

Retained Earnings $86,000,000

Questions:

Calculate the following ratios:

1. Short-Term Solvency Ratios: Current Ratio, Quick Ratio, Cash Ratio

2. Asset Utilization Ratios: Total Asset Turnover, Inventory Turnover, Receivables Turnover

3. Long Term Solvency Ratios: Total Debt Ratio, Debt-Equity Ratio, Equity Multiplier, Times Interest Earned Ratio, Cash Coverage Ratio

Profitability Ratios: Profit Margin, Return on Assets, Return on Equity