You are considering investing in Acme Incorporated. The company has provided you with the balance sheet

and income statement for the previous year. The current price of one share of stock is $36.25. Earnings per

share last year was $1.46.

1. Calculate the requested financial ratios:

a. Current ratio

b. Debt-to-equity ratio

c. Return on sales (use net income AFTER taxes)

d. Return on equity (use net income AFTER taxes)

e. Earnings per share (use net income AFTER taxes)

2. Would you invest in Acme Incorporated? Why or why not?

Acme Incorporated Balance Sheet December 31, 20XX ASSETS Current Assets Cash Marketable Securities Accounts Receivable Notes Receivable Inventories Prepaid Expenses and Other Total Current Assets $380,928 514,800 108,694 855,771 218,156 88,237 $2,166,586 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable Accrued Expenses and Other Current Portion of Finance Debt Total Current Liabilities $326,977 380,496 382,579 $990,052 Long-Term Liabilities Notes Payable Bonds Other Long-Term Liabilities Total Long-Term Liabilities $228,772 380,000 29,478 $ 638,250 Fixed Assets Land Plant and Buildings Equipment Total Fixed Assets $610,000 304,096 218,500 $1,844,701 Total Liabilities $1,728,303 $ 389,538 Other Assets Goodwill, Net Total Other Assets TOTAL ASSETS $ 49,930 $ 49,930 $4,061,217 Owner's Equity Common Stock (342,196 Shares Outstanding) Retained Earnings Total Owners' Equity 1,943,377 $2,332,915 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,061,217 Acme Incorporated Statement of Income FY 20XX REVENUES Net Sales Other Income + Total Revenue $4,090,970 104,227 $4,195,197 COST OF GOODS SOLD $2,773,129 GROSS PROFIT (GROSS MARGIN) $1,422,068 OPERATING EXPENSES Total Selling Expenses Total General Expenses + Total Operating Expenses $333,300 306,036 $639,336 NET INCOME BEFORE TAXES Income Tax Paid (259) NET INCOME AFTER TAXES $782,732 $195,683 $587,049