Calculate Zumwalt's net profit margin and debt ratio. Earth's Best Company has sales of $200,000, a net income of $15,000, and the following balance sheet:

Cash

$10,000

Accounts payables

$30,000

Receceivables

50,000

Other current liabilities

20,000

Inventories

150,000

Long -term debt

50,000

Net fixed assets

90,000

Common equity

200,000

Total assets

$300,000

Total liabilities and equity

$300,000

b. Now suppose we wanted to take this problem and modify it for use on an examthat is, to create a new problem that you have not seen to test your knowledge of this type of problem. How would your answer change if we made the following changes?

What would your answer to (3) be if we changed the original problem to state that the stock was selling for twice the book value, so common equity would not be reduced on a dollar-for-dollar basis?

c. Explain how we could have set the problem up to have you focus on changing accounts receivable, or fixed assets, or using the funds generated to retire debt (we would give you the interest rate on outstanding debt), or how the original problem could have stated that the company needed more inventories and it would finance them with new common equity or with newdebt.