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Year Ended December 31201120102009Net Sales (all on account)$5,003,

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Year Ended December 31201120102009Net Sales (all on
account)$5,003,837$4,934,430Cost of goods
sold2,755,3232,804,459Gross
profit2,248,5142,129,971Interest
expense61,16871,971Income taxes186,258167,239Net
income303,860272,864Cash and cash
equivalents18,62319,1333,530Accounts receivable, less
allowance606,046604,516546,314Total current
assets1,597,3771,547,2901,532,253total
assets4,052,0904,065,4624,035,801Total current
liabilities1,189,8621,111,97344,539Long-term
liabilities1,163,6961,237,549Total shareholders\'
equity*1,698,5321,715,9401,592,180*the firm has no
preferred stockRequirements1. Calculate the following
ratios for 2011 and 2010a. Current rationb. Accounts
receivable turnover ratioc. Debt-to-equity ratiod. Profit
margin ratio
Solution
2011
2010
A
Current Ratio
= Current Assets/ Current Liabilities
=1597377/1189862
= 1.34

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=1547290/1111973
=1.39
B
Account Receivable Turnover Ratio
= Sales on Credit/Accounts Receivable
(here all sale is on account means credit sales)
=5003837/606046
=8.25
= 4934430/604516
=8.16
C
Debt-Equity Ratio
=Total Debt/Shareholder Equity
(here only Long term liability given)
= 1163696/1698532
=0.69
=1237549/1715940
= 0.72
D
Profit Margin Ratio(net profit Margin Ratio)
=Net Income /Sales
=303860/5003837
=0.06
=272864/4934430
=0.06

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Year Ended December 31201120102009Net Sales (all on account)$5,003,837$4,934,430Cost of goods sold2,755,3232,804,459Gross profit2,248,5142,129,971Interest expense61,16871,971Income taxes186,258167,239Net income303,860272,864Cash and cash equivalents18,62319,1333,530Accounts receivable, less allowance606,046604,516546,314Total current assets1,597,3771,547,2901,532,253total assets4,052,0904,065,4624,035,801Total current liabilities1,189,8621,111,97344,539Long -term liabilities1,163,6961,237,549Total shareholders\' equity*1,698,5321,715,9401,592,180*the firm has no preferred stockRequirements1. Calculate the following ratios for 2011 and 2010a. Current rationb. Accounts receivable turnover ratioc. Debt -to-equity ratiod. Profit margin ratio Solution 2011 2010 A Current Ratio = Current Assets/ Current Liabilities =1597377/1189862 = 1.34 =1547290/1111973 =1.39 B Account Receivable Turnover Ratio = Sales on Credit/Accounts Receivable (here all sale is on account means credit sales) =5003837/606046 =8.25 = 4934430/604516 =8.16 C Debt-Equity Ratio =Total Debt/Shareholder Equity (here only Long term liability given) = 1163696/1698532 =0.69 =1237549/1715940 = 0.72 D Profit Margin Ratio(n ...
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