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Ratio calculation

USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS

BMC CORPORATION INCOME STATEMENT
FISCAL YEAR ENDING 12/31/2004
(DOLLARS IN THOUSANDS)

Net Sales $1025
Cost of Goods Sold 682
Gross Profit Margin 343
Depreciation 31
Operating Expense 103
Administrative Expense 127
Operating Profit 82
Interest 27
Profit Before Tax 55
Taxes 17
Net Income $38

BMC CORPORATION BALANCE SHEET
FISCAL YEAR ENDING 12/31/2004
(DOLLARS IN THOUSANDS)

ASSETS LIABILITIES
Cash $ 61 Notes payable $223
Accts rec 286 Accounts payable 152
Inventory 354 Accruals 32
Ttl cur assts 701 Total current liabilities 407
Net fixed assets 802 Long term debt 306

Common stock ($1.50 par) 102
Paid in surplus 226
Retained earnings 462
Total liabilities and
Total assets $1503 Stockholders' equity $1503

1. What was BMC'S return on equity in 2004?

2. What was BMC'S quick ratio for 2004?

3. What was BMC'S interest coverage for 2004?

4. What was BMC'S current ratio at year-end 2004?

5. What was BMC'S net profit margin?

Solution Preview

1. What was BMC'S return on equity in 2004?

Return on Equity = Net Income/Total Equity
= 38/(102+226+462) = 4.81%

2. What was BMC'S quick ...

Solution Summary

The solution explains the calculation of ROE, quick ratio, interest coverage, current ratio and profit margin

$2.19