bast 10 years, she nts. Jaclyn feels be able to make Lases CASE 1: PICKWICK RESTAURANTS Jaclyn Hargrove is the owner of six Pickwick Restaurants. For the past 10 yea has always relied on her accountant to analyze her financial statements. Jaclyn that if she were able to understand her financial statements, she would be abl improve her financial performance. More importantly, she would be able to better decisions that touch on all aspects of her business, from the management working capital to making investments. Jaclyn has just purchased accounting software that can provide her with monthl. quarterly, and yearly financial statements and, more importantly, all types of ratios the would help her improve her analysis and decisions. Jaclyn asks you for some advice in understand the meaning of her financial state ments. She shows you her December 31, 2013, statement of financial position and statement of income and asks you to calculate and explain the meaning of the more important financial ratios. To help Jaclyn understand financial ratios, calculate the financial ratios by using the 2013 statement of financial position and statement of income, and explain to her the meaning and significance of each ratio: a. current ratio b. quick ratio c. debt-to-total-assets ratio d. debt-to-equity ratio e. times-interest-earned ratio f. fixed-charges coverage ratio g. average collection period h. inventory turnover ratio capital assets turnover ratio j. total assets turnover ratio k profit margin on revenue ratio 1. return on revenue ratio m. return on total assets ratio n. return on equity ratio Statement of Financial Position As at December 31, 2013 (in S) Non-current assets Property, plant, and equipment Accumulated depreciation Total non-current assets 100.000 500.000 560,000 1.160,000 1,640,000 Current assets Inventories Trade receivables Term deposits Cash Total current assets Total assets Equity 2,600,000 Preferred shares (700.000) Common shares 1,900,000 Retained earning Total equity Long-term borrowings Current liabilities 1,100,000 Trade and other payables 900,000 Notes payable 120,000 Accruals 90,000 Current income taxes payable 2,210,000 Total current liabilities 4,110,000 Total equity and liabilities 710,000 250,000 260,000 90,000 1,310,000 4,110,000 4,500,000 (3,300,000) 1,200,000 20,000 Statement of Income For the year ended December 31, 2013 (in ) Revenue Cost of sales Gross profit Other income Expenses Distribution costs (350,000) Rent (100,000) Administrative expenses (345,000) Finance costs Depreciation Total other income/costs Profit before taxes Income tax expense Profit for the year (795,000) (120,000) (50,000) (945,000) 255,000 (127,500) 1 27,500