# ratio analysis Ms Lynn Only

**bueych2e89**

**By the due date assigned** solve the problem below, calculate the ratios, interpret the results against the industry average, and fill in the table on the worksheet. Then, **provide an analysis** of how those results can be used by the business to improve its performance. Turn in your completed work to the **Submissions Area through the end of the day.**

**Balance Sheet as of December 31, 2010**

**Gary and Company**

Cash

$45

Accounts payables

$45

Receivables

66

Notes payables

45

Inventory

159

Other current liabilities

21

Marketable securities

33

**Total current liabilities**

**$111**

**Total current assets **

**$303**

Net fixed assets

147

**Long Term Liabilities**

**Total Assets **

**$450**

Long-term debt

24

**Total Liabilities **

**$135**

**Owners Equity**

Common stock

$114

Retained earnings

201

Total stockholders’ equity

315

**Total liabilities and equity**

**$450**

**Income Statement Year 2010**

Net sales

$795

Cost of goods sold

660

**Gross profit **

**135**

Selling expenses

73.5

Depreciation

12

**EBIT**

**49.5**

Interest expense

4.5

**EBT**

**45**

Taxes (40%)

18

**Net income**

**27**

**1. Calculate the following ratios AND interpret the result against the industry average**:

**Ratio**

**Your Answer**

**Industry Average**

**Your Interpretation**

**(Good-Fair-Low-Poor)**

Profit margin on sales

3%

Return on assets

9%

Receivable turnover

16X

Inventory turnover

10X

Fixed asset turnover

2X

Total asset turnover

3X

Current ratio

2X

Quick ratio

1.5X

Times interest earned

7X

**2. Analysis:**

**Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers.**

- 4 years ago
- 20

**Answer(2)**

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