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    Computation of Ratios

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    Industry Average Actual 2009 Actual 2010
    Current Ratio 1.3 1.0
    Quick Ratio 0.8 0.75
    Average Collection Period 23 Days 30 Days
    Inventory Turnover 21.7 19
    Debt Ratio 64.7% 50%
    Times Interest Earned 4.8 5.5
    Gross Profit Margin 13.6% 12.0%
    Net Profit Margin 1.0% 0.5%
    Return on Total Assets 2.9% 2.0%
    Return on Equity 8.2% 4.0%

    Income Statement

    Sales Revenue $100,000
    Less: Cost of Goods Sold 87,000
    Gross Profit $13,000
    Less: Operating Expenses 11,000
    Operating Profit $2,000
    Less: Interest Expense 500
    Net Profit before Taxes $1,500
    Less: Taxes (40%) 600
    Net Profit after Taxes $900

    Assets
    Cash $1,000
    Accounts Receivable 8,900
    Inventories 4,350
    Total Current Assets 14,250
    Gross Fixed Assets $35,000
    Less: Accumulated Depreciation 13,250
    Net Fixed Assets 21,750
    Total Assets $36,000

    Liabilities and stock holder equity
    Accounts Payable $ 9,000
    Accrual 6,675
    Total Current Liabilities $15,675
    Long Term Debt 4,125
    Total Liabilities $19,800
    Stockholders' Equity:
    Common Stock 1,000
    Retained Earnings 15,200
    Total Stockholders' Equity $16,200
    Total Liabilities & Stockholders' Equity $36,000

    The current ratio is 2010 is?
    Since 2009 the liquidiy has increased or decreased?
    The net working capital in 2010 was?
    The inventory turnover in 2010 was?
    The inventory management since 2009 has?
    The average collection period in 2010 was?
    The gross profit margin and net profit margin pecets in 2010 were?
    The return on total assets in 2010 was?
    The return on equity in 2010 was?

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    https://brainmass.com/business/accounting/computation-ratios-400607

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    2010 Comments
    Current Ratio= Current Assets/Current Liabilities 0.909090909 Liquidity has declined as the ratio has declined

    Net Working Capital= Current Assets-Current Liabilities -1425 Negative working capital indicates thin ...

    Solution Summary

    The solution helps in computation of Ratios.

    $2.19