Togo Co. has the following financial statements.

Togo Co.
Income Statement for the Year
Sales revenue				$18,000,000
Less: Cost of goods sold				12,000,000
Gross profit				$ 6,000,000
Less: Operating expenses		$3,700,000
Depreciation		500,000		4,200,000
Operating income				$ 1,800,000
Less: Interest expense		$ 100,000
Income taxes		800,000		900,000
Net income				$ 900,000

Togo Co.
Balance Sheet at the End of the Year
Current assets: Cash		$1,000,000
Accounts receivable		3,600,000
Inventory		2,400,000		$7,000,000
Long-term assets: At cost		$5,000,000
Accumulated depreciation		3,000,000		2,000,000
Total assets				$ 9,000,000
Liabilities & Shareholders Equity Current liabilities: Trade accounts payable		$2,250,000
Other current liabilities		750,000		$3,000,000
Long-term liabilities: Mortgage				1,500,000
Total liabilities				$4,500,000
Shareholders Equity: Common shares		$1,500,000
Retained earnings		3,000,000		4,500,000
Total liabilities & Shareholders Equity				$ 9,000,000

Required

Use the information in the financial statements to answer the following questions:

(a) Calculate the following ratios:

(i) return on sales ratio (as a %)

(ii) return on assets ratio (as a %)

(iii) return on equity ratio (as a %)

(b) Based on these ratios, comment on the profitability of the company.

(c) Calculate the following ratios:

(i) the current ratio

(ii) the quick ratio

(d) Based on these ratios, comment on the liquidity of the company.

(e) Calculate the following ratios:

(i) the gross profit to sales ratio (as a %)

(ii) the ratio of operating expenses to sales (as a %)

(iii) the operating income to sales ratio (as a %)

(iv) the net income to sales ratio (as a %)

(v) the interest cover ratio

(vi) the dividend cover ratio

(f) Based on these ratios, comment on the profitability of the company.

(g) Calculate the following:

(i) the receivables turnover ratio

(ii) the receivables collection period

(iii) the inventory turnover ratio

(iv) the inventory holding period

(v) the total asset turnover ratio

(h) Based on these ratios, comment on the efficiency of the company.

(i) Assume Togo Co.s share price is $100 per share, and there are 100,000 shares in issue. Calculate the following:

(i) the dividend payout ratio

(ii) the earnings per share

(iii) the price to earnings ratio

(j) Based on these ratios, comment on the desirability of these shares as an investment.