Previous Page Next Page Question 5 (15 points) Cash Acets. Receivane Inventory Current Assets Net Fixed Assets Dawson Creek Transit Balance Sheet Liabilities $ 15,000 Accounts Payable 22,000 Notes Payable 30.000 Accrued Expenses 67,000 Current Liabilities 23.000 Long-term Debt Shareholders' Equity $ 21,000 20,000 5.000 46,000 30,000 64.000 Total Liabilities & Total Assets $140.000 Shareholders' Equity $140.000 Sales (80% credit) Less: Cost of Goods Sold Gross Profit Selling and Administrative Expense Rent Expense (Lease) EBIT Interest Expense Earnings before taxes Taxes (25%) Net Income Income Statement $120,000 45.000 75,000 20,000 8.000 28.000 47,000 5.000 42,000 10.500 S 31,500 Common shares outstanding EPS 15,000 $ 2.10 Ratios for Dawson Creek Ratio Profit margin Industry Average 175% Return on equity 3596 8.000 Rent Expense (Lease) EBIT Interest ES Earnings taxes Taxes (@25 Net Income 28.000 47,000 5.000 42,000 10.500 $ 31,500 Common shares outstanding EPS 15,000 $ 2.10 Ratio Profit margin Ratios for Industry Dawson Creek Average 17.5% 35% 4.4x Return on equity Receivables tumover Avg. collection period Inventory turnover Fixed asset turnover Total asset turnover Current ratio Quick ratio 68.0 days 3.5x 2.4x 76x 1.28 85 Times interest earned 12.0x 1. Given the balance sheet and income statement for Dawson Creek Transit, compute the ratios above (10 Marks) 2. List the Ratios for Dawson Creek Transit and compare with the industry average. What do each of these ratios tell us about Dawson Creek Transit. Indicate whether a particular ratio for Dawson Creek Transit is better or worse than the industry average