Instructions: 1) Show all of your work and formulas. 2) Use the financial statements provided to answer the questions

1. The firm's profit margin ratio for 2015 is _____ percent.

2. The firm's return on equity ratio for 2015 is _____.

3. The firms return on assets ratio for 2015 is _____.

4. The firm's P/E ratio for 2015 is _____.

The financial statements of Addison Service Company are given below:

Addison Service Company
Income Statement (2015)
Sales	$8,000,000
Cost of goods sold	5,260,000
Gross profit	2,740,000
Selling and administrative expenses Depreciation	1,350,000 150,000
Operating profit	1,240,000
Interest expenses	140,000
Income before tax	1,100,000
Tax expense	440,000
Net income	$660,000
Balance Sheet
	2015	2014
Cash	$200,000	$50,000
Accounts receivable	1,200,000	950,000
Inventory	1,840,000	1,500,000
Total current assets	3,240,000	2,500,000
Fixed assets	3,200,000	3,000,000
Total assets	$6,440,000	$5,500,000
Accounts payable	800,000	720,000
Bank loan	600,000	100,000
Total current liabilities	1,400,000	820,000
Bonds payable	900,000	1,000,000
Total liabilities	2,300,000	1,820,000
Common stock (130,000 shares)	300,000	300,000
Retained earnings	3,840,000	3,380,000
Total liabilities & equity	$6,440,000	$5,500,000
Note: The common shares are trading in the stock market for $40 each.