1. Compute and interpret financial ratios that managers use to assess liquidity.
2. Compute and interpret financial ratios that managers use for asset management purposes.
3. Compute and interpret financial ratios that managers use for debt management purposes.

B C E Zimmer Company Zimmer Company Comparative Balance Sheet This Year Income Statement Last Year This Year 5 Assets Current assets: Cash $ Marketable securities 310,000 Sales (all on account) 80,000 Cost of goods sold 700,000 Gross margin 750,000 Selling and administrative expenses 195,000 Operating expenses 2,035,000 Depreciation and amortization $4,980,000 2,988,000 1,992,000 10 360,000 220,000 775,000 925,000 355,000 2,635,000 1,975,000 |75,000 4,685,000 Accounts receivable, net Inventory 11 Other current assets 12 Total current assets 13 Plant and equipment, net Other assets 15 Total assets 16 Liabilities and Stockholders' Equity Current Liabilities: 985,500 410,500 150,000 1,546,000 446,000 60,000 1,800,000 General and administrative expenses 100,000 Total selling and administrative expenses $ 3.935,000 Net operating income Interest expense Net income before taxes $ 225,000 Income taxes 600,000 Net income 395,000 18 Accounts payable 386,000 135,100 $ 250,900 Short-term bank loans Accrued payables 21 250,000 750,000 550,000 275,000 1,825,000 575,000 2,400,000 Other current liabilities 22 Total current liabilities 23 Bonds payable, 10% 24 Total liabilities 223,400 Additional information: 1,443,400 Dividend per share paid in current year 400,000 Market price of shares at year end $ 1.00 42.00 20.00 1,843,400 Par value of common stock per share 550,000 275,000 1,825,000 575,000 395,000 223,400 Additional information: 1,443,400 Dividend per share paid in current year 400,000 Market price of shares at year end 1,843,400 Par value of common stock per share 1.00 42.00 20.00 2,400,000 Accrued payables Other current liabilities 22 Total current liabilities Bonds payable, 10% 24 Total liabilities 25 Stockholders' equity: 26 Common stock 27 Retained earnings 28 Total stockholders' equity 29 Total liabilities and stockholders' equity 1,150,000 Number of shares outstanding 1,135,000 2,285,000 4.685.000 1,150,000 941,600 2,091,600 $ 3.935,000 __ 31 Required: 32 Compute the following ratios for the current year only: 33 Gross margin percentage Current ratio (rounded to two decimal places) Acid-test ratio (rounded to two decimal places) 36 Accounts receivable turnover (rounded to two decimal places) 37 Average collection period (rounded to the nearest whole day) 38 Inventory turnover ratio (rounded to two decimal places) 39 Average sales period (rounded to the nearest whole day) Debt-to-equity ratio (rounded to two decimal places) Times interest earned (rounded to two decimal places) 42 Book value per share (rounded to two decimal places)