Bavarian Sausage, Inc. posted the following balance sheet and income statement:
ID: 2745315 • Letter: B
Question
Bavarian Sausage, Inc. posted the following balance sheet and income statement:
Balance Sheet
Cash
$ 50,000
Accounts Payable
$185,000
Accounts Receivable
125,000
Notes Payable
125,000
Inventories
225,000
Long-term debt
115,000
Net Plant and
Equipment
525,000
Common Stock
350,000
Retained earnings
150,000
Total Assets
$925,000
Total liabilities and
Stockholders’ Equity
$925,000
Income Statement
Sales
$525,000
Cost of goods sold
215,000
Depreciation
65,000
Earnings before
interest and taxes
245,000
Interest expense
35,000
Net profit before
taxes
210,000
Taxes (@ 40%)
84,000
Net income
$126,000
What is Bavarian Sausage, Inc.’s quick ratio?
What is Bavarian Sausage, Inc.’s net profit margin?
What is Bavarian Sausage, Inc.’s debt-equity ratio?
Calculate Bavarian Sausage, Inc.’s return on assets.
Calculate Bavarian Sausage, Inc.’s inventory turnover.
Calculate Bavarian Sausage, Inc.’s return on equity.
please show work
Balance Sheet
Cash
$ 50,000
Accounts Payable
$185,000
Accounts Receivable
125,000
Notes Payable
125,000
Inventories
225,000
Long-term debt
115,000
Net Plant and
Equipment
525,000
Common Stock
350,000
Retained earnings
150,000
Total Assets
$925,000
Total liabilities and
Stockholders’ Equity
$925,000
Explanation / Answer
Answer
= (50,000 + 125,000) / (185,000 + 125,000)
= 0.5645
2. Net Profit margin = Net Income / Sales
= 126,000 / 525,000
= 24%
3. Debt-Equity ratio = Long Term Debt/ Common Stock + Retained Earnings
= 115,000 / (350,000 + 150,000)
= 0.23
4. Return On Assets = Net Income / Total Assets
= 126,000 / 925,000
= 13.62%
5. Inventory Turnover = Cost of Goods Sold / Inventory
= 215,000 / 225,000
= 0.96
6. Return on Equity = Net Income / Shareholders' Equity
= 126,000 / 500,000
= 25.2%
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