Solution ACC 102 Below is the balance sheet and income statement for Warren Company. Calculate the ratios that are also shown for the industry average and indicate if a particular ratio for Warren Company is better or worse than the industry average. Warren Company Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash 15,000 Accounts Payable 21,000 Accounts Receivable 22,000 Notes Payable 20,000 Inventory 30,000 Accrued Expenses 5,000 Total Current Assets 67,000 Total Current Liabilities 46,000 Net Plant Assets 73,000 Long-Term Liability 30,000 Stockholder's Equity 64,000 Total Assets $140,000 Total Liabilities & Stockholder's Equity $140,000 Income Statement Sales (80% credit) $120,000 Less: Cost of Goods Sold 45,000 Gross Profit 75,000 Rent Expense Selling and Administrative Expense 20,000 8,000 28,000 EBIT 47,000 Interest Expense 5,000 Income before taxes 42,000 Taxes (@25%) 10,500 Net Income Common Shares outstanding Earnings Per Share $31,500 15,000 $2.00 Ratio Ratios for Warren (Show workings) Industry Average Better (B) or Worse (W) 17.5% 20.8% Profit Margin Return on Asset Return on Equity Receivables Turnover Average collection period 35% 4.4 times 68 Days Inventory Turnover 3.5 times Total Asset Turnover 0.76 times Current Ratio 1.28:1 Quick Ratio Debt to total assets Times Interest Earned .85 .45 12 times