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The accounting department of your company has just delivered a draft of the current year's financial statements to you. The summary is as follows: Beginning

The accounting department of your company has just delivered a draft of the current year's financial statements to you. The summary is as follows:

Beginning of the Year End of the Year
Total Assets $550,000 $563,000
Total Liabilities 210,000 200,000
Total Equity 340,000 363,000
Net Income for the Year 81,000
Common Shares Outstanding 21,000 21,000

You discovered that they have not adjusted for estimated bad debt expenses of $7,600. For each of the following ratios, calculate:

1. The ratio that would have resulted had the error not been discovered (i.e. the incorrect ratio).

2. The correct ratio.

A

B

C

D

E

1

2

3

4

5

6

7

8

9

10

Incorrect: Correct:
ROA
ROE
Debt Ratio
EPS

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