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Problem 3-24 Debt utilization and Du Pont system of analysis [LO3-3] Using the income statement for Times Mirror and Glass Co., compute the following ratios:

Problem 3-24 Debt utilization and Du Pont system of analysis [LO3-3]

Using the income statement for Times Mirror and Glass Co., compute the following ratios:

TIMES MIRROR AND GLASS COMPANY
Sales $ 293,000
Cost of goods sold 154,000
Gross profit $ 139,000
Selling and administrative expense 49,700
Lease expense 19,900
Operating profit* $ 69,400
Interest expense 7,300
Earnings before taxes $ 62,100
Taxes (30%) 24,840
Earnings after taxes $ 37,260
*Equals income before interest and taxes.

a. Compute the interest coverage ratio. (Round your answer to 2 decimal places.)

b. Compute the fixed charge coverage ratio. (Round your answer to 2 decimal places.)

The total assets for this company equal $189,000. Set up the equation for the Du Pont system of ratio analysis. c. Compute the profit margin ratio. (Input your answer as a percent rounded to 2 decimal places.)

d. Compute the total asset turnover ratio. (Round your answer to 2 decimal places.)

e. Compute the return on assets (investment). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

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