Problem 4-7 Financial Ratios (LO3) Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 12,800 Cost of goods sold 3,860 Other expenses Depreciation Earnings before interest and taxes (EBIT) Interest expense Income before tax 4,127 2,398 $ 2,415 665 Taxes (at 30%) $ 1,750 525 Net income Dividends $ 1,225 $ 836 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 85 $ 154 Receivables Other current assets Inventories Total current assets Other long-term assets Total assets Liabilities and shareholders' equity Payables Short-term debt Other current liabilities Total current liabilities 2,182 167 2,410 218 847 912 $ Net property, plant, and equipment 3,281 19,933 4,176 $ 3,694 19,875 3,730 $ 27,390 $ 27,299 $ 2,524 1,399 791 $ 3,000 1,553 767 Long-term debt and leases $ 4,714 8,014 $ 5,320 7,549 Other long-term liabilities 6,138 6,109 Shareholders' equity 8,524 8,321 Total liabilities and shareholders' equity $ 27,390 $ 27,299 Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.) Answer is complete but not entirely correct. a. b. C. d. e. f. Return on equity (use average balance sheet figures) Return on assets (use average balance sheet figures) Return on capital (use average balance sheet figures) Days in inventory (use start-of-year balance sheet figures) Inventory turnover (use start-of-year balance sheet figures) Average collection period (use start-of-year balance sheet figures) 14.54 % 6.18 % 10.43 % 20.61 days 17.71 68.72 days g. Operating profit margin 18.87 % h. Long-term debt ratio (use end-of-year balance sheet figures) 29.24 i. Total debt ratio (use end-of-year balance sheet figures) 40.19 X j. Times interest earned 3.63 k. Cash coverage ratio 7.23 1. Current ratio (use end-of-year balance sheet figures) 0.69 m. Quick ratio (use end-of-year balance sheet figures) 0.65