Answered step by step
Verified Expert Solution
Question
1 Approved Answer
[Financial Statements and Ratios) Bike-With-Us Corporation, a specialty bicycle parts replacement ven- ture, was started last year by two former professional cyclists who had substantial
[Financial Statements and Ratios) Bike-With-Us Corporation, a specialty bicycle parts replacement ven- ture, was started last year by two former professional cyclists who had substantial competitive racing experience, including the Tour de France. The two entrepreneurs borrowed $50,000 from members of their families, and each put up $30,000 in equity capital. Retail space was rented, and $60,000 was spent for fixtures and store equipment. Following is the abbreviated income statement and balance sheet infor mation for the Bike-With-Us Corporation after one year of operation. BIKE-WITH-US CORPORATION S325,000 285,000 10,000 5,000 6,000 $1,000 30,000 Operating costs Fixed assets, net 50,000 11,000 10,000 50,000 60,000 Long-term loarn Stockholders' equity A. Prepare an income statement and a balance sheet for the Bike-With-Us Corporation using only the information provided above. B. Calculate the current ratio, quick ratio, and NWC-to-total-assets ratio. C. Calculate the total-debt-to-total-assets ratio, debt-to-equity ratio, and interest coverage. D. Calculate the net profit margin, sales-to-total-assets ratio, and the return on assets. E. Calculate the equity multiplier. Combine this calculation with the calculations in Part D to show the ROE model with its three components
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started