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    Company's solvency, liquidity, and profitability

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    Using the following ratios, calculate the company's solvency, liquidity, and profitability:
    a) Current ratio
    b) Return on sales
    c) Earnings per share (EPS)
    d) Debt ratio
    e) Price earnings ratio

    The company's annual income statement and balance sheet are attached.

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    Solution Preview

    See the attached files.
    a) Current Ratio: Current assets divided by current liabilities. An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is.
    b) Return on Sales: A widely used ratio that detects operational efficiency. This measure provides helpful insight to management about how much profit is ...

    Solution Summary

    The solution calculates the company's solvency, liquidity, and profitability.