Chapter 4: Measuring Corporate Performance Transylvania Railroad As you can see, someone has spilled ink over some of the entries in the balance sheet and income statement of Transylvania Railroad. Use the information from the tables to work out the following missing entries, and then calculate the company's return on equity. Note: Inventory turnover, average collection period, and return on equity are calculated using start-of-year, not average, values. The corporate tax rate is 35%. Long-term debt ratio Times interest earned Current ratio Quick ratio Cash ratio Inventory turnover Average collection period 0.4 8.0 1.4 1.0 0.2 5.0 73 days Income Statement (figures in millions of dollars) Net sales Cost of goods sold Selling, general, and administrative expenses Depreciation Earnings before interest and taxes (EBIT) Interest expense Income before tax Tax Net Income *** *** 10 20 *** *** *** *** *** Fachbereich Elektrische Energietechnik Prof. Dr. Valerie Wulfhorst Betriebswirtschaftslehre, insb. Controlling Telefon 02921 378-451 Telefax 02921 378-409 E-Mail v.wulfhorst@fh-swf.de Standort Soest Lbecker Ring 2 59494 Soest Balance Sheet (figures in millions of dollars) This Year Last Year Assets Cash and marketable securities *** 20 Receivables *** 34 Inventories *** 26 Total current assets *** 80 Net property, plant, and equipment *** 25 Total assets *** Liabilities and shareholders' equity Accounts payable 25 20 105 Fachhochschule Sdwestfalen Sitz: Iserlohn Hagen Iserlohn Meschede Soest www.fh-swf.de Notes payable 30 35 Total current liabilities *** 55 Long-term debt *** 20 Shareholders' equity *** 30 Total liabilities and shareholders' equity 115 105 Wir geben Impulse