Answer the Problem Set Question #7 Calculating a company’s financial ratios
Address the questions and calculate the ratios. Please use formulas on pages 14-15
Using the information provided, calculate this firm’s ROA, ROE, gross profit margin, and quick ratio. If this firm’s WACC is 6.6 percent and the average firm in its industry has an ROA of 8 percent, is this firm earning above or below normal economic performance and above or below average accounting performance?
Net sales 6,134 Operating cash 3,226 Net other operating assets 916
Cost of goods sold (4,438) Accounts receivable 681Total assets 5,161
Selling, general administrative expenses (996) Inventories 20 Net current liabilities 1,549
Other expenses (341) Other current assets 0 Long-term debt 300
Interest income 72 Total current assets 3,927 Deferred income taxes 208
Interest expense (47) Gross properties, plant, equipment 729 Preferred stock 0
Provision for taxes (75) Accumulated depreciation (411) Retained earnings 0
Other income 245 Book value of fixed assets 318 Common stock 3,104
Net income 554 Goodwill 0Other liabilities 0 Total liabilities and equity 5,161