Use the information given below for The Palm Limited to calculate the following ratios for 2019 and give a brief explanation why these ratios will be used interpret and evaluate a company:

1. Rate of return on total assets

2. Rate of return on ordinary shareholders' equity

3. Rate of return on net sales

4. Times-interest-earned ratio

5. Debt ratio, 31 December 2019

6. Current ratio, 31 December 2019

7. Earnings per ordinary share

The following information has been taken from the financial statements of The Palm Limited: (The Palm Limited has only issued common shares)

Net profit Total assets, 1 January 2019 Total liabilities, 31 December 2019 Net sales Interest expense Current assets, 31 December 2019 Current liabilities, 31 December 2019 Income tax expense Total assets, 31 December 2019 Shareholders' equity, 1 January 2019 Shareholders' equity, 31 December 2019 Ordinary shares issued for 2019

$ 60,000 500,000 175,000 900,000 20,000 175,000 75,000 25,000 575,000 300,000 400,000 100,000

Answer:

Ratio	Explanation
1.
2.
3.
4.
5.
6.
7.