1

Industry
Ratio 2019 2020 2021
2012
Current Ratio 2.5 2 1.8 2.25
Acid Test Ratio 1 0.9 1 1.1
Receivable Turnover 5x 4.5x 6x
Inventory Turnover 3x 2x 2x
Gross Profit Ratio 39% 41% 40% 33%
Net Profit Ratio 17% 15% 15%
Return on Total Asset 10% 7% 6%

Current ratio = Current assets / Current liabilities

7,500,000 / 4,000,000 = 1.8

2.5 / 2 x 1.8 = 2.25

Acid test ratio = Quick assets / Current liabilities

4,000,000 / 4,000,000 = 1

1 / 0.9 x 1 = 1.1

Receivable turnover = Net credit sales / Ave. trade receivables

Collection period = 360 days / Receivable turnover

2.4

Inventory turnover = Cost of sales / Ave. inventories

Days to sell inventories = 360 days’ / Inventory turnover

1.7
 1,000,000
2,500,000
9,500,000
17,000,000

S AND STOCKHOLDERS EQUITY

2,000,000
1,000,000
1,000,000
4,000,000
 ASSETS
Current Assets
Cash 500,000
Accounts receivable 2,500,000
Marketable securities 1,000,000
Inventory 3,500,000
TOTAL CURRENT ASSETS 7,500,000
Non-Current assets
Property and equipment 6,000,000
Intangibles 1,000,000
Other non-current assets 2,500,000
TOTAL NON-CURRENT ASSETS 9,500,000
TOTAL ASSETS 17,000,000

LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:
Notes Payable 2,000,000
Accounts Payable 1,000,000
Accrued Wages and taxes 1,000,000
TOTAL CURRENT LIABILITIES 4,000,000
Non-Current liabilities:
Long-term debt 3,400,000
Other Long-term debt 1,600,000
TOTAL NON-CURRENT LIABILITIES 5,000,000

STOCKHOLDERS EQUITY
Preferred Stock 2,000,000
Common Stock 4,000,000
Retained earnings 2,000,000
TOTAL STOCKHOLDERS EQUITY 8,000,000
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 17,000,000