Use the  information from the tables to work out the following missing entries, and then calculate the company’s return on equity. Note: Inventory turnover, average collection period, and return on equity are calculated using start-of-year, not average, values.

 

INCOME STATEMENT
(Figures in $ millions)
Net sales
Cost of goods sold
Selling, general, and administrative expenses	19.00
Depreciation	29.00
Earnings before interest and taxes (EBIT)
Interest expense
Income before tax
Tax (35% of income before tax)
Net income

BALANCE SHEET
(Figures in $ millions)
	This Year	Last Year
Assets
Cash and marketable securities		$29.00
Accounts receivable		43.00
Inventories		35.00
Total current assets		$107.00
Net property, plant, and equipment		34.00
Total assets		$141.00
Liabilities and shareholders’ equity
Accounts payable	$20.00	$15.00
Notes payable	30.00	35.00
Total current liabilities		$50.00
Long-term debt		25.00
Shareholders’ equity		66.00
Total liabilities and shareholders’ equity	$190.00	$141.00

Long-term debt ratio Times interest earned Current ratio Quick ratio Cash ratio Inventory turnover 0.2 8.0 1.7 1.0 0.4 4.0 Average collection period 73 days