Ratios
Not what you're looking for?
Using the income statement for Paste Management Company
compute the following ratios:
a. The interest coverage.
b. The fixed charge coverage.
The total assets for this company equal $80,000. Set up the equation for the
Du Pont system of ratio analysis, and compute c, d, and e.
c. Profit margin.
d. Total asset turnover.
e. Return on assets (investment).
PASTE MANAGEMENT COMPANY
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $126,000
Less: Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000
Less: Selling and administrative expense . . . . . . . . . . . . . . . . . 11,000
Less: Lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Operating profit* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,000
Less: Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000
Less: Taxes (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,500
*Equals income before interest and taxes.
Purchase this Solution
Education
- BA, Ain Shams University, Cairo Egypt
- MBA, California State University, Sacramento
Recent Feedback
- "ty i have more need help with"
- "ty i have jmore i need help with"
- "great help"
- "excellent help"
- "Very helpful and easy to understand."
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.