EX 8-2: You are the new manager of the Duke Snyder Motel. In order to better understand the motel's financial situation, you decide to examine the financial statements for the year just ended (20X4). The motel's balance sheet and condensed income statement are as follows:

Required: Calculate the following ratios: 1. Current ratio. 2. Acid-test ratio. 3. Debt-equity ratio. 4. Profit margin. 5. Return on owners' equity (assume that the only change in owners' equity during 20X4 is the net income of $65,100). 6. Return on total assets (assume that total assets were $640,000 on January 1, 20X4).

210,000 Assets Current Assets Cash Account Receivable Inventories Total Current Assets Property and Equipment Land Building (net) Furniture & Equipment (net) Total Property and Equipment Total Assets Duke Snyder Motel Balance Sheet December 31, 20X4 in US dollars Liabilities and Owners' Equity Current Liabilities 95,000 Long-term Liabilities: 100,000 Note from Owner 5,000 Mortgage Payable 200,000 Long-term liabilities Total Liabilities 60,000 Owners' Equity 300,000 Common Stock 80,000 Retained Earnings 440,000 Total Owners' Equity 640,000 Total Liabilities and Owners' Equity 40,000 80,000 120,000 330,000 100,000 210,000 310,000 640,000 Page 10 Duke Snyder Motel Condensed Income Statement For the year ended December 31, 20X4 in US dollars Sales Interest Cost of Goods Sold 1,500,000 200,000 800,000 Other Fixed Charges 120,000 162,000 93,000 Income Before Taxes Income Tax 27,900 Operating Expenses Contribution Margin Undistributed Operating Expenses Gross Operating Profit 500,000 125,000 375,000 Net Income 65,100