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

Balance Sheets:
	2018	2017
Cash and equivalents	$110	$95
Accounts receivable	275	300
Inventories	375	350
Total current assets	$760	$745
Net plant and equipment	2,000	1,490
Total assets	$2,760	$2,235
Accounts payable	$150	$85
Accruals	75	50
Notes payable	160	185
Total current liabilities	$385	$320
Long-term debt	450	290
Common stock	1,225	1,225
Retained earnings	700	400
Total liabilities and equity	$2,760	$2,235

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 firms 2018 current ratio? Round your answer to two decimal places.

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Solution

The 2018 current ratio indicates that Rosnan has -Select-insufficientsufficientCorrect 1 of Item 3 current assets to meet its current obligations as they come due. What is the firms 2018 total assets turnover ratio? Round your answer to four decimal places.

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Given the 2018 current and total assets turnover ratios calculated above, if Rosnans 2018 quick ratio is 1.0 then an analyst might conclude that Rosnans fixed assets are managed -Select-efficientlyinefficientlyCorrect 1 of Item 4. What is the firms 2018 debt-to-capital ratio? Round your answer to two decimal places. %

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If the industry average debt-to-capital ratio is 30%, then Rosnans creditors have a -Select-smallerbiggerCorrect 1 of Item 5 cushion than indicated by the industry average. What is the firms 2018 profit margin? Round your answer to two decimal places. %

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If the industry average profit margin is 12%, then Rosnans lower than average debt-to-capital ratio might be one reason for its high profit margin. -Select-TrueFalseCorrect 1 of Item 6

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

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Using the DuPont equation, what is the firms 2018 ROE? Round your answer to two decimal places. %