1. Financial Ratios: Calculate the following financial ratios and explain the meaning of the results.
   1. Net Profit Margin
   2. Quick Ratio
   3. Debt-to-Equity Ratio

Income Statement Data for 20XX:

• Units produced and sold = 420
• Sales ($80 per unit selling price) = $33600
• Cost of goods sold ($30 per unit, all variable costs) = $12600
• Labor = $0 (Mr. and Mr. Lee were the only ones working and did not pay themselves)
• Advertising fees =$2000
• Bank fees = $150
• Phone/internet = $1200
• Shipping ($3 per unit) = $1260
• Utilities = $900
• Office supplies = $800
• Interest expense on note payable = $350
• Depreciation expense (straight line) = $800
• Income tax rate = 26 %

Other Financial Data for 20XX:

• Proceeds from sale of equipment = $3000. The equipment originally cost $1000 and had accumulated depreciation of $200.
• Purchase of equipment = $1600 (The machine is purchased on the last day of 20XX so no depreciation expense is recorded.)
• Repayment of note payable = $5000
• Consider any data relevant from the income statement.

Balance Sheet Data for Beginning of 20XX:

• Cash and cash equivalents = $10000
• Accounts receivable = $0 (Cash is received at time of sale)
• Raw materials inventory = $10500
• Equipment = $5000 (This includes the $1000 cost of the equipment sold in 20XX).
• Accumulated depreciation = $1,000 (This includes the accumulated depreciation of 200 for the equipment sold in 20XX.
• Accounts payable = $0 (Cash is paid at the time of purchase.)
• Note payable = $5000 (This is the note payable which is repaid in 20XX)
• Common stock = $15000
• Retained earnings = $4500