Ratios should be displayed with 2 digits after the decimal place. even when the calculation results in whole number , two decimaks should be shown for clarity . tge inly exception to this might be the average collection period . thus may ve rounded up to show whole days .

$155,000 425,000 SMITH CORPORATION Current Assets Liabilities Cash $ 75,000 Accounts payable Marketable securities 16,000 Bonds (long-term) Accounts receivable 150,000 Inventory 160,000 Long-Term Assets Stockholders' Equity Fixed assets $1,100,000 Common stock Less: Accum. dep. (550,000) Paid-in capital Net fixed assets 550,000 Retained earnings Total assets $ 951.000 Total liab and equity $ 145,000 70,000 156,000 $ 951.000 * Use net fixed assets in computing fixed asset turnover. SMITH CORPORATION Sales (on credit) Cost of goods sold Gross profit Selling and administrative expense Less: Depreciation expense Operating profit Interest expense Earnings before taxes Tax expense Net income $2,150,000 1,225,000 925,000 455,000 105.000 365,000 43,000 322,000 110,000 $ 212,000 22 21 20 Includes $15.000 in lease payments, Formula Smith Calculation Smith answer 1 Ratio Profit Margin ROA NT/SLs 2120000/2150000 2 NI/Tot Ast 3 ROE NI/Equity 4 A/R Turn Credit Sls/AR 5 Avg. Col Per. Inv. Tum AR/Avg. Daily Cr. Sls Sis/Inv 6 7 Fx Asset Tum Sis/NET Fx Ast ON 8 Tot. Ast. Tum Sls/Ast 9 Current Cur. Ast/Cur Lia 10 Quick Sur Ast-Inx/Sur Lia 11 Debt Tot. Ast. Total Lia/Tot Ast 12 Times Int Earn Oper Prft/Interest 13 Fx. Chrg. Cov. Oper Pr + Lease/ Lease + Int