Ratios Calculation Value Numerator Denominator Profitability ratios Gross profit margin (%) Operating profit margin (%) Net profit margin (%) Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier Balance Sheet Data Income Statement Data Cash Accounts payable Accounts receivable Inventory $700,000 1,400,000 2,100,000 Accruals Notes payable Current assets 4,200,000 Current liabilities $840,000 280,000 1,120,000 2,240,000 3,640,000 5,880,000 980,000 2,940,000 3,920,000 $9,800,000 Sales Cost of goods sold Gross profit Operating expenses EBIT Interest expense EBT Long-term debt Total liabilities $14,000,000 7,000,000 7,000,000 3,500,000 3,500,000 571,200 2,928,800 732,200 $2,196,600 Common stock Net fixed assets 5,600,000 Retained earnings Total equity Total debt and equity Taxes Net income Total assets $9,800,000