44 Cavalier Company Royale Company Balance Sheet Cash $ 21,000 $ 50,000 Accounts Receivable, Net Inventory 51,000 102,000 542, 000 136, 000 12,000 17,000 152,000 42,000 Equipment, Net Other Assets Total Assets $ 852,000 $ 273,000 Current Liabilities $ 7,000 47,000 Notes Payable (long-term) $ 112,000 182,000 476,000 46,000 Common Stock (par $20) 206, 000 Additional Paid-In Capital Retained Earnings 5,000 8,000 36,000 Total Liabilities and Stockholders' Equity $ 852,000 $ 273,000 Income Statement Sales Revenue $788,000 $ 268,000 Cost of Goods Sold Other Expenses 476,000 236,000 146,000 91, 000 Net Income $ 76,000 $ 31,000 Other Data Per share price at end of year $ 20.00 $ 12.00 Selected Data from Previous Year Accounts Receivable, Net $ 10,000 Notes Payable (long-term) Equipment, Net $ 43,000 182,000 542,000 91, 000 558,000 47,000 152,000 34,000 219,000 Inventory Total Stockholders' Equity These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $71,000 cash and Cavalier Company is asking for $26,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavalier has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account. Required: 1. Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) Ratio Royale Company Cavalier Company Tests of Profitability: 1. Net Profit Margin % 2. Gross Profit Percentage % 3. Fixed Asset Turnover 4. Return on Equity % 5. Earnings per Share 6. Price/Earnings Ratio Tests of Liquidity: 7. Receivables Turnover 7. Days to Collect 8. Inventory Turnover 8. Days to Sell 9. Current Ratio Tests of Solvency: 10. Debt-to-Assets % % %