Quantitative Problem: Rosnan Industries' 2018 and 2017 balance sheets and income statements are shown below.

Balance Sheets:

2018

2017

Cash and equivalents

$120

$105

Accounts receivable

275

300

Inventories

375

350

Total current assets

$770

$755

Net plant and equipment

2,000

1,490

Total assets

$2,770

$2,245

Accounts payable

$150

$85

Accruals

75

50

Notes payable

170

195

Total current liabilities

$395

$330

Long-term debt

450

290

Common stock

1,225

1,225

Retained earnings

700

400

Total liabilities and equity

$2,770

$2,245

Income Statements:

2018

2017

Sales

$2,000

$1,500

Operating costs excluding depreciation

1,250

1,000

EBITDA

$750

$500

Depreciation and amortization

100

75

EBIT

$650

$425

Interest

62

45

EBT

$588

$380

Taxes (40%)

235

152

Net income

$353

$228

Dividends paid

$53

$48

Addition to retained earnings

$300

$180

Shares outstanding

100

100

Price

$25.00

$22.50

WACC

10.00%

What is the firm's 2018 current ratio? Round your answer to two decimal places.

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If the industry average debt-to-total-assets ratio is 30%, then Rosnan's creditors have a

cushion than indicated by the industry average.

What is the firm's 2018 net profit margin? Round your answer to four decimal places.

%

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If the industry average profit margin is 12%, then Rosnan's lower than average debt-to-total-assets ratio might be one reason for its high profit margin.

What is the firm's 2018 price/earnings ratio? Round your answer to two decimal places.

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Using the DuPont equation, what is the firm's 2018 ROE? Round your answer to two decimal places.

%

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