Financial ratios. textbook assignment 1 financial statement analysis

Faith Company

Balance Sheet


Cash and marketable securities $600,000

Accounts receivable        900,000

Inventories            1,500,000

Prepaid expense  75,000

Total current assets         $3,075,000

Fixed assets         8,000,000

Less: accum depreciation           -2,075,000

Net fixed assets   $5,925,000

Total assets         $9,000,000



Account payable   $800,000

Notes payable      700,000

Accrued taxes      50,000

Total current liabilities      $1,550,000

Long-term debt     2,500,000

Owner’s equity (1 million shares of common stock outstanding)         4,950,000

Total liabilities and owner’s equity           $9,000,000


Income Statement

Net sales (all credit)         $10,000,000

Less: Cost of goods sold -3,000,000

Selling and administrative expense         -2,000,000

Depreciation expense      -250,000

Interest expense   -200,000

Earning before taxes        4,550,000

Income taxes        -1,820,000

Net income           $2,730,000

1. Based on the information in Table 3-1, the current ratio is?

2. Based on the information in Table 3-1, the quick ratio is?

3. Based on the information in Table 3-1, the average collection period is?

4. Based on the information in Table 3-1, the accounts receivable turnover is?

5. Based on the information in Table 3-1, the debt ratio is?

6. Based on the information in Table 3-1, the return on assets (ROA) is?

7. Based on the information in Table 3-1, the times interest earned ratio is?

8. Based on the information in Table 3-1, assuming that no preferred dividend were paid, the return on common equity is?

9. Based on the information in Table 3-1, the fixed asset turnover ratio is? 

10. Based on the information in Table 3-1, the total asset turnover is?



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