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# Financial Statement Analysis

I have spreadsheets but my calculations are not coming up to the numbers provided.
Table 1
Smith Company Balance Sheet

Assets:
Cash and marketable securities \$300,000
Accounts receivable 2,215,000
Inventories 1,837,500
Prepaid expenses 24,000
Total current assets \$3,286,500
Fixed assets 2,700,000
Less: accumulated depreciation 1,087,500
Net fixed assets \$1,612,500
Total assets \$4,899,000
Liabilities:
Accounts payable \$240,000
Notes payable 825,000
Accrued taxes 42,500
Total current liabilities \$1,107,000
Long-term debt 975,000
Owner's equity 2,817,000
Total liabilities and owner's equity \$4,899,000
Net sales (all credit) \$6,375,000
Less: Cost of goods sold 4,312,500
Depreciation expense 135,000
Interest expense 127,000
Earnings before taxes \$412,500
Income taxes 225,000
Net income \$187,500
Common stock dividends \$97,500
Change in retained earnings \$90,000

Based on the information in Table 1, the current ratio is:
a. 2.97.
b. 1.46.
c. 2.11.
d. 2.23.

Based on the information in Table 1, the debt ratio is:
a. 0.70.
b. 0.20.
c. 0.74.
d. 0.42.

Based on the information in Table 1, the net profit margin is:
a. 4.61%.
b. 2.94%.
c. 1.97%.
d. 5.33%.

#### Solution Preview

The formula for the current ratio is current assets / current liabilities.

Current Assets = 3,286,500
Current Liabilities = ...

\$2.19