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The following financial statements were prepared by Mystery Inc. for the year ended December 31, 2018. Also presented are various financial statement ratios for Mystery

The following financial statements were prepared by Mystery Inc. for the year ended December 31, 2018. Also presented are various financial statement ratios for Mystery Inc as calculated from the prior year's financial statements. Sales represent net credit sales. The total assets and the receivables and inventory balances at December 31, 2018, were the same as at December 31, 2017.

Mystery Inc.

Balance Sheet

December 31, 2018

Assets:

Liabilities and Capital

Cash

$

840,000

Accounts payables

$

660,000

Receivables

400,000

Notes payable

100,000

Inventory

700,000

Other current liabilities

140,000

Total current assets

$

1,940,000

Total current liabilities

$

900,000

Plant and equipmentnet

760,000

Long-term debt

450,000

Common stock

450,000

Retained earnings

900,000

Total assets

$

2,700,000

Total liabilities and capital

$

2,700,000

Mystery Inc.

Income Statement

Year Ended December 31, 2018

Sales

$

4,000,0000

Cost of goods sold

Material

$

900,000

Labor

700,000

Overhead

600,000

2,200,000

Gross margin

$

1,800,000

Selling expenses

$

540,000

General and administrative expenses

300,000

840,000

Operating income

$

960,000

Less interest expense

90,000

Income before taxes

$

870,000

Less federal income taxes

304,000

Net income

$

566,000

Required:

Items 1 through 9 below represent financial ratios that the auditor calculated during the prior year's audit. For each ratio, calculate the current year's ratio from the financial statements presented above.

Calculations

12/31/2018

12/31/2017

1.

Current ratio

2.5

2.

Quick ratio

1.3

3.

Accounts receivable turnover

5.5

4.

Inventory turnover

2.5

5.

Total asset turnover

1.2

6.

Gross margin percentage

35

%

7.

Net operating margin %

25

%

8.

Times interest earned

10.3

9.

Total debt to equity

50

%

I need help with 5 through 9 thanks

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