Requirement 1 Rate of return on total assets is calculated by adding interest expense to net income and dividing by average total assets. Interest expense is added back to net income to determine the real return on the assets regardless of the corporation's financing choices (debt or equity). The formula is (Net income - Interest expense)/ Average total assets = Rate of return on total assets

Requirement 2 Find the rate of return on common stockholders' equity. The formula is (Net income- preferred dividends) / Average common stockholders equity= rate of return on common stockholders' equity

Requirement 3 Find the gross profit. The formula is Net Sales-Cost of goods sold = gross profit

Requirement 4 Find the profit percentage. The formula is (Gross profit/ Net Sales) x 100

Requirement 5 Find the average inventory turnover ratio. The formula is (Beginning merchandise inventory+ Ending Merchandise inventory)/2 = average merchandise inventory

Requirement 6 Find the Average merchandise inventory. The formula is Costs of goods sold/ average merchandise inventory = inventory turnover

Requirement 7

The third ratio we will examine is the days' sales in inventory. This measures the average number of days merchandise inventory is held by the company. Days' sales in inventory varies widely, depending on the business. An increasing trend is a negative sign, since inventory is not being sold as quickly, or too much inventory is being held in storage. A decreasing trend is a good indicator, since inventory is being sold more quickly, or less inventory is being held in storage. But, a business must watch that stock-outs do not occur.

In order to calculate days' sales in inventory, use the formula below. Calculate this ratio 365/ Inventory turnover = Days's sales inventory

Requirement 8 Find the acid test ration. The formula is (Cash and cash equivalents+ Short-term investments+Neet current receivables)/ total current liabilities = acid test ratio

Requirement 9 Find the current ratio. The formula is (current assets + merchandise inventory)/ total current liabilities = current ratio

Requirement 10 Find the debt ratio. The formula is (current liabilities + long term debt)/ total assets = debt ratio

Requirement 11 Find the Debt to equity ratio Formula is (current liabilities + long term debt)/ total equity = debt to equity ratio

Requirement 12 Find the times-interest earned ration. Formula is (Net income+ income tax expense+ interest expense)/interest expense =times-interest earned ration

Requirement 13 Find the dividends per share

Requirement 14 Find the dividend payout ratio. The formula is Dividends per share/ earnings per share= dividend payout ratio

2013 WRM Athletic Supply, Inc. Five-Year Financial Summary (Partial; adapted) (Dollar amounts in thousands except per share data) 2018 2017 2016 2015 2014 Net Sales Revenue $ 265,000 $ 220,000 $ 199,000 $ 170,000 $ 138,000 Net Sales Revenue Increase 20% 11% 17% 23% 17% Domestic Comparative Store Sales Increase 6% 6% 5% 7% 9% Other Income,Net 2,100 1,880 1,740 1,700 1,320 Cost of Goods Sold 199,810 168,300 154,822 133,280 109,020 Selling and Administrative Expenses 41,290 36,370 31,660 27,470 22,560 Interest: Interest Expense (1,010) (1,340) (1,350) (1,100) (820) Interest Income 130 155 205 230 125 Income Tax Expense 4,500 3,830 3,610 3,300 2,770 Net Income 20,620 12,195 9,503 6,780 4,275 20,620 12,195 9,503 6,780 4,275 1.40 1.00 0.80 0.58 1.10 0.43 0.45 0.39 0.35 0.31 Ga 16,200 Net Income Per Share of Common Stock: Net Income Dividends Financial Position Current Assets, Excluding Merchandise Inventory Merchandise Inventory Property, Plant, and Equipment, Net Total Assets Current Liabilities Long-term Debt Stockholders' Equity Financial Ratios Acid-Test Ratio 30,400 $ 27,400 $ 25,000 22,800 51,800 46,100 107,200 96,300 32,100 27,400 22,900 21,900 52,200 47,000 26,200 $ 24,000 $ 21,000 19,400 40,900 36,000 88,100 79,400 29,100 25,900 16,800 18,300 42,200 35,200 21,800 17,900 $ 25,500 65,200 16,200 12,300 36,700 0.9 1.0 0.9 0.9 .3 1.40 1.10 1.00 0.80 0.58 0.45 0.43 0.39 0.35 0.31 $ 16,200 Net Income Dividends Financial Position Current Assets, Excluding Merchandise Inventory Merchandise Inventory Property, Plant, and Equipment, Net Total Assets Current Liabilities Long-term Debt Stockholders' Equity Financial Ratios Acid-Test Ratio Rate of Return on Total Assets Rate of Return on Stockholders' Equity 30,400 $ 27,400 $ 25,000 22,800 51,800 46,100 107,200 96,300 32,100 27,400 22,900 21,900 52,200 47,000 21,800 17,900 $ 25,500 65,200 26,200 $ 24,000 $ 21,000 19,400 40,900 36,000 88,100 79,400 29,100 25,900 16,800 18,300 42,200 35,200 16,200 12,300 36,700 0.9 1.0 0.9 0.9 1.3 21.3% 14.7% 13.0% 10.9% 9.9% 41.6% 27.3% 24.6% 18.9% 18.4%