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The following financial statements pertain to the Davis Division of YZA Corporation for the year ended December 31, Year 11: Davis Division Income Statement Description

The following financial statements pertain to the Davis Division of YZA Corporation for the year ended December 31, Year 11:

Davis Division Income Statement

Description

Amount ($)

Sales revenue

1,050,400

Cost of goods sold

578,300

Gross margin

472,100

Operating expenses

255,400

Depreciation expense

55,000

Operating income

161,700

Nonoperating items

30,600

Gain on sale of land

10,200

Net income

202,500

Davis Division Balance Sheet

Assets

Amount ($)

Cash

82,600

Accounts receivable

215,400

Merchandise inventory

180,300

Equipment less accumulated depreciation

290,000

Total assets

768,300


Liabilities and Stockholders' Equity

Amount ($)

Accounts payable

130,200

Notes payable

63,400

Stockholders' equity

574,700

Total liabilities and stockholders' equity

768,300

Required:

  1. Calculate the net profit margin for Davis Division.
  2. Determine the return on equity (ROE) for Davis Division.
  3. Compute the quick ratio for Davis Division.
  4. Evaluate the interest coverage ratio for Davis Division.
  5. Assess the Davis Division’s debt to total assets ratio.

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