Question
Selected information from the comparative financial statements of ZZ Tire Company for the year ended December 31, appears below: (Points will not be awarded unless
Selected information from the comparative financial statements of ZZ Tire Company for the year ended December 31, appears below: (Points will not be awarded unless you show work)
2014 | 2013 | ||
Accounts receivable (net) | $ 180,000 | $200,000 | |
Inventory | 140,000 | 160,000 | |
Total assets | 1,200,000 | 800,000 | |
Current liabilities | 140,000 | 110,000 | |
Long-term debt | 400,000 | 300,000 | |
Net credit sales | 1,330,000 | 700,000 | |
Cost of goods sold | 900,000 | 530,000 | |
Interest expense | 50,000 | 25,000 | |
Income tax expense | 60,000 | 29,000 | |
Net income | 150,000 | 85,000 |
There is no preferred stock and the tax rate is 30%.
Required:
Calculate each of the following for 2014:
a. Debt ratio
b. Debt-to-equity ratio
c. Times interest earned ratio
d. Gross margin percentage
e. Return on assets
f. Return on common stockholders
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