Question
Calculating activity and profitability ratios 2016 Income statement Sales $9,000 Cost of goods sold $6,300 Gross profit $2,700 Operating expenses $2,000 Interest expense $200 Tax
Calculating activity and profitability ratios
2016 Income statement
Sales $9,000
Cost of goods sold $6,300
Gross profit $2,700
Operating expenses $2,000
Interest expense $200
Tax expense $200
NET INCOME $300
Comparative Balance Sheets
2016 2015
Cash $600 $500
Accounts receivable 600 400
Inventory 800 600
Property,plant, and equip 2,000 2,100
Liabilities and Shareholders equity
Current liabilities 1,100 850
Bonds payable 1,400 1,400
Pain in capital 600 600
Retained earnings 900 750
Required:
Calculate the following ratios for 2016.
1.Inventory turnover ratio
2.Average days in inventory
3.Receivables turnover ratio
4.Average collection period
5.Asset turnover ratio
6.Profit margin on sales
7.Return on assets
8.Return on shareholders' equity
9.Equity multiplier
10.Return on shareholders' equity (using the DuPont framework)
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