BUSN 3710 - Assignment 3 Use the information from the Income Statement and Balance Sheet below to make a financial ratio analysis. Calculate the financial ratios of Davies Inc. and compare with its Industry ratios. Comment the results. Show all formulas (not just the figures) and all calculation. Ratios in 2 decimals. a. Working Capital b. Current Ratio (Industry = $1.80) C. Inventory Turnover (Ind. = 7 times) d. Returns on Sales (Ind. = 7%) e. ROA (Ind. = 11%) f. Debt / Equity (Ind. = 0.9) TABLE 4-1 Davies Inc.Income Statement for Year Ending December 31,2010 (5 million $ 600 460 $ 140 $20 15 30 Sales Cost of goods sold Gross profits Operating expenses: Selling expenses General and administrative expenses Depreciation expense Total operating expenses Operating income (EBIT) Interest Earnings before taxes Income taxes Net income Number of common shares outstanding (millions) Earnings per share (EPS) Dividends per share (DPS) $65 $ 75 15 $ 60 18 $ 42 20 $ 2.10 $0.50 TABLE 4-2 Davies Inc. Balance Sheets ($ millions) December 31, 2010 Assets Cash $ 20 36 84 $ 143 $ 410 (115) $ 295 $438 Accounts receivable Inventories Other current assets Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets Debt and Equity Accounts payable Accrued expenses Short-term notes Total current liabilities Long-term debt Total liabilities Equity Common stockholders' equity Common stock-par value Paid-in capital Retained earnings Total common equity Total liabilities and equity $ 42 10 12 $ 64 $ 171 $ 235 $ 11 75 117 $ 203 $438 TABLE 4-2 Davies Inc. Balance Sheets ($ millions) December 31, 2010 Assets Cash $ 20 36 84 $ 143 $ 410 (115) $ 295 $438 Accounts receivable Inventories Other current assets Total current assets Gross fixed assets Accumulated depreciation Net fixed assets Total assets Debt and Equity Accounts payable Accrued expenses Short-term notes Total current liabilities Long-term debt Total liabilities Equity Common stockholders'equity Common stock-par value Paid-in capital Retained earnings Total common equity Total liabilities and equity $ 42 10 12 $ 64 $ 171 $ 235 $ 11 75 112 $ 203 $438