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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 Summary

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

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Definitions:
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 ...

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