Exhibit A

James Trading Corporation

Balance Sheet

December 31, 20XX

Assets	$	Liabilities and Equity	$
Cash	23,015
Accounts receivable	141,258	Accounts payable	184,372
Inventory	212,444	Long term debt	168,022
Total current assets	376,717	Total liabilities	352,394
Net Plant and equipment	711,256	Common Stock	313,299
Other assets	89,879	Retained earnings	512,159
		Total equity	825,458
Total Assets	$1,177,852	Total Liabilities and Equity	$1,177,852

James Trading Corporation

Income Statement

December 31, 20XX

Income Statement	$
Sales	$2,130,000
Cost of goods sold	(1,015,000)
Gross margin	1,115,000
Operating expenses	(878,000)
Depreciation	(16,030)
Operating income	220,970
Interest expense	(10,011)
Earnings before taxes	210,959
Income taxes	(54,000)
Net income	$156,959

Industry Average Ratios

Item	Ration
Current ratio	2.1
Quick ratio	0.8
Days in inventory	92
Days in accounts receivable	63
Gross margin	23.9%
Net margin	12.3%
Long term debt to equity ratio	1.0
Interest coverage	5.6
ROA	5.3%
ROE	18.8%

Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the current ratio.

• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the quick ratio.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute days in inventory.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the gross margin.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the net margin.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the long term debt to equity ratio.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the interest coverage.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the ROA.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the ROE.
• Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the ROE using the DuPont Model