The following are the financial statements for LMR Industries for the year ended

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The following are the financial statements for LMR Industries for the year ended Dec 31, 2010 LMR Industries Income Statement for the Year Ended December 31, 2010 Sales Revenue $320,000 Less: Cost of Goods Sold    212,000 Gross Profits $108,000 Less: Operating Expenses Selling expense $ 32,000 General & Admin expense       20,000 Lease expense         2,000 Depreciation expense       20,000 Total Operating Expense $ 74,000 Operating Profit $ 34,000 Less: Interest Expense       12,200 Net Profit before taxes $ 21,800 Less: Taxes         8,720 Net profits after taxes $ 13,080 LMR Industries Balance Sheet December 31, 2010 ASSETS LIABILITIES & Stockholder's Equity Cash $       1,000 Accounts Payable $     44,000 Marketable securities           2,000 Notes Payable         94,000 Accounts Receivable         50,000     Total Current Liabilities $   138,000 Inventories         91,000 Long Term Debt $     45,900     Total Current Assets $   144,000 Total Liabilities $   183,900 Land $     52,000 Buildings and Equipment       180,000 Common Stock         63,000 Less: Accum depreciation         76,000 Retained Earnings         53,100     Net Fixed Assets $   156,000 Total Assets $ 300,000 Total Liab & Stockholder's Equity $ 300,000 The firm has 6,000 shares outstanding of common stock and closed 2009 at a price of $40 per share. Using the preceding financial statements, calculate the following ratios for 2010: Industry Ratio Average Actual 2009 Actual 2010 Debt ratio 65% 67% Gross profit margin 38% 40% Net profit margin 3.5% 3.6% Return on total assets 4.0% 4.0% Return on common equity 9.5% 8.0% Market / Book ratio 1.1 1.2 Use the space below to comment on LMR's financial condition as it is related to: Profitability and Market The following are the financial statements for LMR Industries for the year ended Dec 31, 2010 LMR Industries Income Statement for the Year Ended December 31, 2010 Sales Revenue $320,000 Less: Cost of Goods Sold    212,000 Gross Profits $108,000 Less: Operating Expenses Selling expense $ 32,000 General & Admin expense       20,000 Lease expense         2,000 Depreciation expense       20,000 Total Operating Expense $ 74,000 Operating Profit $ 34,000 Less: Interest Expense       12,200 Net Profit before taxes $ 21,800 Less: Taxes         8,720 Net profits after taxes $ 13,080 LMR Industries Balance Sheet December 31, 2010 ASSETS LIABILITIES & Stockholder's Equity Cash $       1,000 Accounts Payable $     44,000 Marketable securities           2,000 Notes Payable         94,000 Accounts Receivable         50,000     Total Current Liabilities $   138,000 Inventories         91,000 Long Term Debt $     45,900     Total Current Assets $   144,000 Total Liabilities $   183,900 Land $     52,000 Buildings and Equipment       180,000 Common Stock         63,000 Less: Accum depreciation         76,000 Retained Earnings         53,100     Net Fixed Assets $   156,000 Total Assets $ 300,000 Total Liab & Stockholder's Equity $ 300,000 The firm has 6,000 shares outstanding of common stock and closed 2009 at a price of $40 per share. Using the preceding financial statements, calculate the following ratios for 2010: Industry Ratio Average Actual 2009 Actual 2010 Debt ratio 65% 67% Gross profit margin 38% 40% Net profit margin 3.5% 3.6% Return on total assets 4.0% 4.0% Return on common equity 9.5% 8.0% Market / Book ratio 1.1 1.2 Use the space below to comment on LMR's financial condition as it is related to: Profitability and Market

Explanation / Answer

Ratio Industry Average Actual 2009 Actual 2010 Calculations Actual 2010 vis-

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