Fin 301-02 (Fall 2018) Homework: Chapter 4 Homework Score: 3 of 5 pts & Problem

Question

Fin 301-02 (Fall 2018) Homework: Chapter 4 Homework Score: 3 of 5 pts & Problem 4-6 (similar to) 3of8(80°mplete) Ratio analysis) The balance sheet and income statement for the A. Thiel Milg Company are given in the popup window Calculate the following ratios a. Current ratio b. Operating return on assets c. Times interest eamed d. Debt ratio e. Inventory tunover f. Average colection period g. Total asset turnover h. Flxed asset turmover L Operating proft margin L Return on equity a.The current ratiois». (Round to two decimal places) Enber your answer in the answer box and then click Check Answer Clear All 4 0 tab caps lock

Explanation / Answer

Answer a.

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $3,488 / $2,038
Current Ratio = 1.71 times

Answer b.

Operating Return on Assets = Operating Income / Total Assets
Operating Return on Assets = $1,656 / $7,982
Operating Return on Assets = 20.7%

Answer c.

Times Interest Earned = Operating Income / Interest Expense
Times Interest Earned = $1,656 / $350
Times Interest Earned = 4.73 times

Answer d.

Debt Ratio = Total Debt / Total Assets
Debt Ratio = (Current Liabilities + Long-term Debt) / Total Assets
Debt Ratio = ($2,038 + $1,990) / $7,982
Debt Ratio = 50%

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