Creative Advertising constructs, maintains, and sells advertising for highway billboard signs. Use the information in the following financial statements for the next five problems and cases.

Required:
(a) Calculate the four profitability ratios for Creative Advertising Limited for 2010.
(b) What can you conclude from these ratios?

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Creative Advertising Limited Income Statement for the year ended December 31, 2010 400,000 210,000 190,000 75,000 s 115,000 Sales Cost of goods sold Gross profit Expenses (excluding interest) EBIT Interest expense EBT Income tax expense (40%) Net income Preferred dividends Net income available to common shareholders 2009 350,000 185,000 s 165,000 55,000 s 110,000 20,000 $ 90,000 36,000 S 54,000 2,000 $ 52,000 $ 95,000 38,000 $ 57,000 2.000 S 55,000 Creative Advertising Limited Statement of Retained Earnings for the year ended December 31 Opening retained earnings Net income available to common shareholders Dividends to common shareholders Closing retained earnings 2010 35,000 55,000 10,000 $ 80,000 2009 $ (7,000) 52,000 10,000 35,000 Creative Advertising Limited Balance Sheet as at December 31, 2010 2009 Assets Current assets Cash Accounts receivable Inventory Total current assets Property, plant, and equipment Intangible assets Total assets 25,000 50,000 50,000 125,000 500,000 50,000 $675,000 15,000 40,000 45,000 100,000 400,000 35,000 $535,000 Liabilities Current liabilities Accounts payable Long-term liabilities Long-term liabilities (10%) Preferred shares (2%) Total long-term liabilities Total liabilities 75.000 200,000 100.000 300,000 375,000 50,000 150,000 250,000 300,000 Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 200,000 100,000 300,000 $ 675,000 200,000 35,000 235,000 $ 535,000