In this question, you will analyze their Measures of Profitability: Although Rush Industries' gross profit margin is $($a$.$ below or b$.$ above$)$

its industry average, the company has a$($n$)($a$.$ higher or b$.$ lower$)$

net profit margin in comparison to average. Additional details are below: Week $4$ KPI Assignment

This week you will explore analysis by computing key performance indicators for a company. You should calculate each ratio using the financial statements provided and then choose the correct answer from the choices provided in the assignment. You will round to two decimal places. If it is expressed at a $\%,$ you need to convert to $\%$ and then take out two decimal places. Standard rounding applies.

Rush Industries Income Statement for the Year Ended December $31,2019$ 

Sales revenue $ $160,000$ 

Less: Cost of sales $106,000$ 

Gross profits $ $54,000$ 

Less: Operating expenses

Sales and marketing expense $ $16,000$ 

General and administrative expenses $10,000$ 

Lease expense $1,000$ 

Depreciation expense $10,000$ 

Total operating expense $ $37,000$ 

Operating profits $ $17,000$ 

Less: Interest expense $6,100$ 

Net profits before taxes $ $10,900$ 

Less: Taxes $4,360$ 

Net income $ $6,540$ 

Rush Industries Balance Sheet December $31,2019$ 

Assets

Cash $ $500$ 

Marketable securities $1,000$ 

Accounts receivable $25,000$ 

Inventories $45,500$ 

Total current assets $ $72,000$ 

Land $ $26,000$ 

Buildings and equipment $90,000$ 

Less: Accumulated depreciation $38,000$ 

Total fixed assets $ $78,000$ 

Total assets $ $150,000$ 

Liabilities and Stockholders$’$ Equity

Accounts payable $ $22,000$ 

Notes payable $47,000$ 

Total current liabilities $ $69,000$ 

Long$-$term debt $22,950$ 

Total liabilities $91,950$ 

Common stocka $31,500$ 

Retained earnings $26,550$ 

Total stockholders' equity $58,050$ 

Total liabilities and stockholders$’$ equity $ $150,000$ 

a The firm$’$s $3,000$ outstanding shares of common stock closed $2019$ at a price of $$25$ per share.

Using the financial statements above, you will calculate the $2019$ actual ratios. You will then enter your answers in the questions that follow. The first set of questions will be to provide your ratios. Then you will analyze by comparing to industry and $2018($both provided here$).$

 

Industry Actual Actual Rush Industries Ratio Analysis Average 2018 2019 Financial Current ratio 1.80 1.84 Condition Quick ratio 0.70 0.78 & Net Days Sales Outstanding* 48 58 Worth Inventory turnover 2.50 2.59 Measures Gross profit margin of Net profit margin 38% 40% 3.5% 3.6% Profitability Cost per sales dollar 10.00 11.50 Measures Debt to Equity 1.50 1.42 of Financial Leverage Return on common equity 9.5% 8.0%