# Required Calculate the following ratios for 2018. 2018 Income Statement Sales $8,900 Cost of...

## Question:

Financial statements for Askew Industries for 2018 are show below in ($000s)

2018 Income Statement | |
---|---|

Sales | $8,900 |

Cost of goods sold | (6,275) |

Gross profit | 2,625 |

Operating expenses | (1,975) |

Interest expense | (190) |

Tax expense | (184) |

Net Income | $276 |

Comparative Balane Sheets | ||
---|---|---|

Dec. 31 | ||

2018 | 2017 | |

Assets | ||

Cash | $590 | $490 |

Accounts receivable | $590 | $490 |

Inventory | 790 | 590 |

Property, plant, and equipment (net) | 1,900 | 2,000 |

$3,870 | $3,470 | |

Liabilities and Shareholders Equity | ||

Current Liabilities | $1,040 | $790 |

Bonds payable | 1,350 | 1,350 |

Paid-in capital | 590 | 590 |

Retained earnings | 890 | 740 |

$3,870 | $3,470 |

Required: Calculate the following ratios for 2018. Complete the table below.

1. | Inventory turnover ratio | 9.09 |
---|---|---|

2. | Average days in inventory | 40.13 days |

3. | Receivables turnover ratio | 18.16 |

4. | Average collection period | 20.09 days |

5. | Asset turnover ratio | 2.42 |

6. | Profit margin on sales | 3.10% |

7. | Return on assets | 7.52% |

8. | Return on shareholders' equity | _______% |

9. | Equity multiplier | 2.61 times |

10. | Return on shareholders equity (using the DuPont framework) | _______% |

## Return on equity:

Return on equity (ROE) can be calculated using the following 2 formulas. ROE = Net income / Stockholder's equity shows how effective management is in using the assets to generate profits. The second formula is known as the Dupont Framework which includes the components of profit margin x total asset turnover x leverage factor. The formula can be broken down as follows: ROE = (Net income / Revenues) x (Revenues / Total assets) x (Total assets / Stockholder's equity).

## Answer and Explanation: 1

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View this answerRequired: Calculate the following ratios for 2018. Complete the table below.

...1. | Inventory turnover ratio | 9.09 |
---|---|---|

2. |

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Chapter 2 / Lesson 8Discover what the DuPont analysis in finance is. Review its importance and uses. Explore its model and formulas, and learn how to calculate it through examples.