Question

8. Use the information below about an example company to calculate the financial ratios below.

Net profit before tax = $208,000

Total equity = $500,000

Total assets = $330,000

Total liabilities = $150,000

Current assets = $64,000

Current liabilities= $45,000
____________________________________________________________
a. Calculate the return on equity (ROE) for the example company. (0.5 points)

b. Calculate the return on assets (ROA) for the example company. (0.5 points)

c. Calculate the debt ratio for the example company. (0.5 points)

d. Calculate the debt to equity ratio for the example company. (0.5 points)

e. Calculate the current ratio for the example company. (0.5 points)

Answer 1

Given:
Net profit before tax = $208,000
Total equity = $500,000
Total assets = $330,000
Total liabilities = $150,000
Current assets = $64,000
Current liabilities= $45,000

Return on Equity = Net Income / Shareholder's equity = 208,000 / 500,000 = 0.416 or 41.6%.

Return on Assets = Net Income / Total Assets = 208,000 / 330,000 = 0.63 or 63%

Debt ratio = Total Liabilities / Total Assets = 150,000 / 330,000 = 0.4545 or 45.45%

Debt to equity ratio = Total liabilities / Total Equity = 150,000 / 500,000 = 0.30 or 30%

Current ratio = Current Assets / Current Liabilities = 64,000 / 45,000 = 1.42

Answer 2

Answer:

ddd

Step-by-step explanation: