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)