Question 3. 3.(TCO 6) Calculate the five ratios for the following company info.
Income Statement Balance Sheet
Revenue 10,000 Assets Liab. + OE
EBIT $2,000 cash $10,000 a/p $2,000
Interest $500 A/R $1,000 Bonds payable $50,000
Earnings B4 Tax $1,500 Equip $25,000 equity $84,000
EAT (at 40%) $900 Bldg $100,000
Total $136,000 $136,000
– return on sales
– ROA
– ROE
– fixed asset turnover
– times interest earned
(Points : 20)
Return on sales = 900/10000 = 9% ROA = (900*(1-.4))/136000 = .40% ROE = 900/84000 = 1.07% Fixed asset turnover = 10000/125000 = .08 Times interest earned = 2000/500 = 4
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