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There was a bit of concern about one of RBL s newer entities RBL Paving Company. Management wants you to review the two financial statements

There was a bit of concern about one of RBLs newer entities RBL Paving Company.
Management wants you to review the two financial statements below and give your
analysis of the companys performance.
RBL Paving Company
Assets Liabilities
Current Assets: Current Liabilities:
Cash 200,000 Accounts Payable 700,000
Accounts Receivable 300,000 Notes Payable 600,000
Inventory 800,000
Total Current Assets 1,300,000 Total Current Liabilities 1,300,000
Fixed Assets: Owners Equity:
Property, Plant & Equipment 2,200,000 Common Stock ($1 Par)600,000
Less: Accumulated Depreciation 600,000 Capital Surplus 100,000
Net Fixed Assets 1,600,000 Retained Earnings 100,000
Total Assets 2,900,000 Total Owners Equity 800,000
Total Liabilities and Owners
Equity
2,900,000
RBL Paving Company
Income Statement for Year Ending December 31,2021
Sales 3,400,000
Less: Cost of Goods Sold 2,700,000
Less: Administrative Expenses 700,000
Less Depreciation 682,000
Earnings Before Interest and Taxes (682,000)
Less: Interest Expense 120,000
Taxable Income (802,000)
Less: Taxes (280,000)
Net Income (522,000)
Dividends 0
Addition to Retained Earnings (522,000)
Required: Evaluate the performance of RBL Paving Company using the below
ratios. Define each ratio, perform the calculation, and provide an explanation of the
result.
a. Return on equity
b. Total assets turnover
c. Return on assets
d. Current ratio
e. Receivables turnover

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