Zimmer, Inc. has provided its recent financial statements. The Controller has asked you to use this information to compute and interpret financial ratios that managers are going to use to assess liquidity and use for asset and debt management purposes. Use the information included in the Excel Simulation and the Excel functions described below to complete the task.

• Cell Reference: Allows you to refer to data from another cell in the worksheet. From the Excel Simulation below, if in a blank cell, =B7 was entered, the formula would output the result from cell B7, or 360,000 in this example.
• Basic Math functions: Allows you to use the basic math symbols to perform mathematical functions. You can use the following keys: + (plus sign to add), - (minus sign to subtract), * (asterisk sign to multiply), and / (forward slash to divide). From the Excel Simulation below, if in a blank cell =C13+C14 was entered, the formula would add the values from those cells and output the result, or 1,900,000 in this example. If using the other math symbols the result would output an appropriate answer for its function.
• ROUND function: Allows you to round a number or result of a formula calculation to a specific number of digits. The syntax of the ROUND function is =ROUND(number,num_digits) and returns the result of your formula rounded to a particular number of digits. The number argument can be a cell reference to a number or a formula itself that results in a number. The num_digits argument is the number of digits you want to round. The num_digits value rounds based on basis mathematical rounding rules, where anything below 5 will round down and anything 5 and above rounds up. Also, the num_digits value should be a positive value to round to any number of decimal places, while a negative value would round to the left of the decimal place, and a zero would round to the nearest whole number. If the value 1,253.5693 was entered in cell A1, it can be used in the ROUND function as the number reference. In this example, if the value in cell A1 should be rounded to 2 decimal places, in a new cell the function would be written as =ROUND(A1,2) and would result in as 1,253.57 in this example. If the number in cell A1 should be rounded to the nearest hundred place, in a new cell the function would be written as =ROUND(A1,-2) and would result in 1,300 in this example.

Zimmer Company Recent financial statements for Zimmer, Inc. are as follows: Zimmer Company Comparative Balance Sheet This Year Assets Income Statement Last Year This Year 6 Current assets: 7 Cash $ $ 4,980,000 360,000 220,000 8 Marketable securities 2,988,000 9 Accounts receivable, net 775,000 1,992,000 10 Inventory 925,000 310,000 Sales (all on account) 80,000 Cost of goods sold 700,000 Gross margin 750,000 Selling and administrative expenses 195,000 Operating expenses 2,035,000 Depreciation and amortization 1,800,000 General and administrative expenses 11 Other current assets 355,000 12 Total current assets 2,635,000 985,500 410,500 150,000 13 plant and equipment, net 14 Other assets 1,975,000 75,000 4,685,000 100,000 Total selling and administrative expenses 1,546,000 446,000 15 Total assets 16 Liabilities and Stockholders' Equity 17 Current Liabilities: 60,000 386,000 18 19 Accounts payable Short-term bank loans Accrued payables $ 3,935,000 Net operating income Interest expense Net income before taxes $ 225,000 Income taxes 600,000 Net income 395,000 223,400 Additional information: 1,443,400 Dividend per share paid in current year 400,000 Market price of shares at year end 135,100 250,900 250,000 750,000 550,000 275,000 1,825,000 575,000 20 21 Other current liabilities 22 Total current liabilities $ 1.00 23 Bonds payable, 10% 42.00 24 Total liabilities 2,400,000 1,843,400 Par value of common stock per share 20.00 25 Stockholders' equity: 26 Common stock Number of share outstanding 1,150,000 941,600 27 Retained earnings 1,150,000 1,135,000 2,285,000 4,685,000 28 Total stockholders' equity 2,091,600 29 Total liabilities and stockholders' equity $ 3.935,000 30 31 Required: 32 33 24 35 ac 36 38 Compute the following ratios for the current year only: Gross margin percentage Current ratio (rounded to two decimal places) Acid-test ratio (rounded to two decimal places) Accounts receivable turnover (rounded to two decimal places) 37 Average collection period (rounded to the nearest whole day) Inventory turnover ratio (rounded to two decimal places) 39 Average sales period (rounded to the nearest whole day) 40 Debt-to-equity ratio (rounded to two decimal places) Times interest earned (rounded to two decimal places) Book value per share (rounded to two decimal places) 43 Earnings per share (rounded to two decimal places) Dividend payout ratio (rounded to three decimal places) 45 Dividend yield ratio (rounded to three decimal places) 46 Price-earnings ratio (rounded to two decimal places) 41 42 44 17