FSU Manufacturing, Inc. has the following financial statements data for 2014:

Income Statement			Balance Sheet
Sales	$102,500		Cash	$40,000
Cost of Goods	$50,000		Fixed Assets	$55,000
SG&E Expenses	$35,000		Total Assets	$95,000
EBIT	$17,500		Accounts Payable	$12,000
Interest Expense	$2,500		Long-term Debt	$25,000
Taxes	$6,000		Retained Earnings	$28,000
Net Income	$9,000		Paid-in Common Equity	$30,000

Trait 1		Use of financial statements
1.
	a.		Compute the firms debt ratio and current ratio.
	b.		Is the firm profitable? Does the balance sheet balance? Explain.
	c.		If the firm paid $5,000 in dividends in 2014, what was its retained earnings balance at the end of 2013? (20 points)

Trait 2		Student relates financial ratios to improved business decisions
2.
	a.		Compute the firms net profit margin, total asset turnover, and financial leverage multiplier (also known as the equity multiplier).
	b.		Explain what each of the three ratios above tells you about the firms performance and how they combine to form the firms return on equity.
	c.		The financial data for the firms major competitors show on average a net profit margin of 16%, total asset turnover of 1.25, but comparable leverage. Identify some possible business decisions that the firm could make so that it would be as attractive an investment as its competitors.