Problem 4

Using the information below, calculate this firms ROA, ROE, Gross Profit Margin, and Quick Ratio. If this firms WACC is 6.6% and the average firm in its industry has an ROA of 8%, is this firm earning above or below normal economic performance and above or below average accounting performance?

Net Sales 6,134 Cost of Goods Sold (4438) Selling, General Admin. Expense (996) Other Expenses (341) Interest Income 72 Interest Expense (47) Provision for Taxes (75) Other Income 245 Net Income 554

Operating Cash 3,226 Accounts Receivable 681 Inventories 20 Other Current Assets 0 Total Current Assets 3,927 Gross Prop., Plant, Equip. 729 Accumulated Depreciation (411) Book Value of Fixed Assets 318 Goodwill 0 Net Other Operating Assets 916 Total Assets 5,161

Net Current Liabilities 1,549 Long Term Debt 300 Deferred Income Taxes 208 Preferred Stock 0 Retained Earnings 0 Common Stock 3,104 Other Liabilities 0 Total Liabilities and Equity 5,161