Question No. 5 (10) a. Company Looners Inc. has the following account information (all in BDT): Cost of Goods sold 50,000 Interest payment 1000 Gross profit 30,000 Current liabilities 12,000 Net fixed asset 60,000 Tax rate 5% Current asset 15,000 Earning before tax 10,000 Selling and administrative expenses could not be found (but they exist)

Calculate the following ratios and explain the results with proper explanation considering some other information provided: i. Interest coverage ratio ii. Net asset turnover ratio Some other information: LoonersInc. had interest coverage ratio of 2 and 3 in year 2016 and 2017 accordingly. This ratio was considered an ideal industry benchmark. The current debt ratio of the company is 10%. Previously it was 45% (considered acceptable by all stakeholders).

Net asset turnover ratio was 8 and 7 in year 2016 and 2017 accordingly. Competitors have upgraded their products with new technology, on the other hand, LoonersInc. did not yet pick up the pace with technological advancement.