1. What are the formulas (in attached below) Highlighted in yellow and how do I calculate please?
2. How would you answer (in attached below) questions "a" and "b"?

Solution Problem 3-37 Instructions Enter formulas to calculate the following ratios. If possible, use cell references to the financial statements Use a 360 day year. Jones and Smith Comparison One way of analyzing the situation for each company is to compare the respective ratios for each, On exi those ratios which would be most important to a supplier or short-term lender and a stockholder. Jones Corp. Smith Corp. Profit margin FORMULA FORMULA Return on assets FORMULA FORMULA Return on equity FORMULA FORMULA Receivable turnover FORMULA imes FORMULA times Average collection period FORMULA day FORMULA days tory turnover FORMULA times FORMULA times Fixed asset turnover FORMULA times FORMULA times Total asset turnover FORMULA times FORMULA times Current ratio FORMULA times FORMULA times Quick ratio FORMULA times FORMULA times Debt to total assets FORMULA FORMULA Times interest earned FORMULA times FORMULA times Fixed charge coverage FORMULA times FORMULA times a. To which company would you, as credit manager for a supplier, approve the extension of (short-term) trade credit? Why? b. In which one would you buy stock? Why? 1 Home Problem 3-22 Problem 3-23 Problem 3-24 Problem 3-36 Problem 3-37 Point Accessibility: UnavailableSMITH CORPORATION Current Assets Liabilities Cash $35,000 Accounts payable $75,000 J51 Marketable securities 7,500 Bonds payable (long-term) 210,000 Accounts receivable 70,000 Inventory 75,000 Long-Term Assets Stockholders' Equity Fixed Assets $500,000 Common stock $75,000 Less: Accumulated Depreciation (250,000) Paid-in capital 30,000 Net fixed assets 250,000 Retained earnings 47,500 Total assets $437,500 Total liabilities and equity $437,500 Sales (on credit) $1,000,000 Cost of goods sold 600,000 Gross profit $400,000 Selling and Administrative expenset 224,000 Less: Depreciation expense 50,000 Operating Profit $126,000 Interest expense 21,000 Earnings before taxes $105,000 Tax expense 52,500 Net Incom $52,500 "Use net fixed assets in computing fixed assel turnover. + Includes $7,000 in lease payments. Solution Problem 3-37 Instructions Enter formulas to calculate the following ratios. If possible, use cell references to the financial statements Use a 360 day year. Jones and Smith Comparison One way of analyzing the situation for each company is to compare the respective ratios for each, On ex: e ratios which Id be most important to a supplier or short-term lender and a stockholder. Jones Corp. Smith Corp. Profit margin FORMULA FORMULA Return on assets FORMULA FORMULA Return on equity FORMULA FORMULA Receivable turnover FORMULA times FORMULA times Average collection period FORMULA days FORMULA days Inventory turnover FORMULA times FORMULA times Fixed asset turnover FORMULA times FORMULA time Total asset turnover FORMULA times FORMULA times Home Problem 3-22 Problem 3-23 Problem 3-24 Problem 3-36 Problem 3-37 Point Accessibility: UnavailableFoundations of Financial Management Block, Hirt, and Danielsen Problem 3-37 Objective: Ratio computation and analysis Given the financial statements for Jones Corporation and Smith Corporation: a. To which company would you, as credit manager for a supplier, approve the extension of (short-term) trade credit? Why? Compute all ratios before answering b. In which one would you buy stock? Why? JONES CORPORATION Current Assets Liabilities Cash $20,000 Accounts payable $100,000 Accounts receivable 80,000 Bonds payable (long-term) 80,000 Inventory 50,000 K25 Long-Term Assets Stockholders' Equity Fixed Assets $500,000 Common stock $150,000 Less: Accumulated Depreciation (150,000) Paid-in capital 70,000 Net fixed assets" 350,000 Retained earnings 100,000 Total assets $500,000 Total liabilities and equity $500,000 Sales (on credit) $1,250,000 Cost of goods sold 750,000 Gross profit $500,000 Selling and Administrative expenset 257,000 Less: Depreciation expense 50,000 Operating Profit $193,000 Interest expense 8.000 Earnings before taxes $185,000 Tax expense 92,500 Net Income 692,500 Use net fixed assets in computing fixed asset turnover. + Includes $7,000 in lease payments. Home Problem 3-22 Problem 3-23 Problem 3-24 Problem 3-36 Problem 3-37