Marygrace D.

Arendain
BA4102

Financial Ratios (14 items x 10 points)

Compute the following financial ratios and interpret the results (Low, High, OK) based on the given industry averages. Write your answers on the spaces
provided.

Industry
Ratio Formula Calculation Comment
Average

current assets
Current Ratio Current ratio Low
current liabilities

Current asset−invento ry
Quick Ratio Quick Ratio
current liabilities Low

Sales
Inventory turnover ITR= Low
Ratio Inventory
Receivables
DSOR
Days sales outstanding average sales per day days High
Ratio
Recivables
¿
Annual sales
Sales
FATR= assets ¿
Fixed assets turnover Net ¿
High
Ratio
Sales
TATR=
Total assets turnover Total assets
Low
Ratio
 total debt
Total debt to TDTTC
total debt∧equity %
total capital Low

Industry
Ratio Formula Calculation Comment
Average

EBIT
Times-interest-earned TIE ratio = interest charge Low

EBIT
Operating margin OM = Sales % Low

Net income
Profit margin PM = Sales % Low

Net Income
Return on total assets ROA= % Low
Tatal Assets

Return on Net Income

ROE= % Low
common equity Common Equity

Return on EBIT (1 – T)
ROIC = Total investment capital %
invested capital Low

EBIT
Basic earning power BEP = Total assets %
195,800 High
=9.79
2,000,000