Based on the balance sheet and income statement for Tonka Trucking LLC (next page), calculate the following ratios:

Question 1 - Total Asset Turnover

Question 2 - Gross Profit Margin

Question 3 - Debt to Asset Ratio

Question 4 - Net Profit Margin

Question 5 - Calculate and then explain Tonka's unusually high Return on Equity.

Tonka Trucking LLC - Balance Sheet

Assets

Current Assets

Cash

$50,000

Accounts Receivable

$40,000

Inventory

$10,000

Total Current Assets

$100,000

Fixed Assets

Gross Equipment $500,000

Accumulated Depreciation ($200,000)

Net Equipment

$300,000

Total Fixed Assets

$300,000

Total Assets

$400,000

Liabilities and Owners Equity

Current Liabilities

Accounts Payable

$50,000

Total Current Liabilities

$50,000

Long-term Liabilities

Long-term Debt

$50,000

Total Long-term Liabilities

$50,000

Total Liabilities

$100,000

Owner's Equity

Common Stock (1,000 shares)

$100,000

Retained Earnings

$200,000

Total Owner's Equity

$300,000

Total Liabilities and Owner's Equity

$400,000

Tonka Trucking LLC Income Statement

Revenue

$400,000

Cost of Goods Sold

($50,000)

Gross Profit

$350,000

Selling, General, and Administrative Expenses

($100,000)

Depreciation Expense

($50,000)

Earnings Before Interest and Taxes (EBIT)

$200,000

Interest Expense

($50,000)

Income Tax Expense

($40,000)

Net Income

$110,000