QUESTION 4 MEGAFRAME COMPUTER COMPANY Balance Sheet As of December 31 ASSETS Cash Accounts receivable Inventory Net plant and equipment Total assets 50,000 70,000 110,000 220,000 $ 450,000 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable Accrued expenses Long-term debt Common stock Paid-in capital Retained earnings Total liabilities and stockholders' equity 70,000 50,000 130,000 70,000 40,000 90,000 $ 450,000 875,000 600,000 MEGAFRAME COMPUTER COMPANY Income Statement For the year ended December 31 Sales (all on credit) Cost of goods sold Gross profit Sales and administrative expenses Depreciation Operating profit Interest expense Profit before taxes Taxes (30%) Net income 275,000 30,000 55,000 190,000 25,000 165,000 49,500 $ 115,500 Please use the tables above to calculate followings ratios and show your work: (1) Accounts Receivable Days (2) ROE (3) Inventory Turnover (4) Net Profit Margin (5) ROA QUESTION 5 Please use the financial ratios below to evaluate and each company's performance relative to the other three companies in the industry. Please be more specific. ROE 98.8% Axel Co. Blue Co Carol Co. David Co. Net profit margin 19% 6% 10% Total asset turnover 1.53 1.88 1.00 1.11 Assets-to-Equity Ratio 3.4 1.6 1.06 1.8 18.0% 10.6% 8.0% 4%