Question
Selected information from the comparative financial statements of ZZ Tire Company for the year ended December 31, appears below: 2014 Accounts receivable (net) $180,000 Inventory
Selected information from the comparative financial statements of ZZ Tire Company for the year ended December 31, appears below:
2014
Accounts receivable (net) $180,000
Inventory $140,000
Total assets 1,200,000
Current liabilities 140,000
Long-term debt 400,000
Net credit sales 1,330,000
Cost of goods sold 900,000
Interest expense 50,000
Income tax expense 60,000
Net income 150,000
2013
Accounts receivable (net) $200,000
Inventory $160,000
Total assets 800,000
Current liabilities 110,000
Long-term debt 300,000
Net credit sales 700,000
Cost of goods sold 530,000
Interest expense 25,000
Income tax expense 29,000
Net income 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' equity
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