The following balance sheet and income statement data were taken from the financial records of The Dana Point Company:

Required
1. Calculate the following ratios for The Dana Point Company for 2015 and 2016:

Return on equity                                                     Long-term debt to total assets 

Return on sales                                                       Long-term debt to shareholders’ equity 

Asset turnover                                                         Interest coverage ratio 

Financial leverage                                                   Quick ratio 

Receivable collection period                                 Current ratio 

Inventory-on-hand period                                     Gross profit margin ratio 

Days’ payable period

2. Comment on the trends in profitability, asset management, and financial risk for The Dana Point Company from 2015 to 2016.

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THE DANA POINT COMPANY Balance Sheets 2016 2015 2016 2015 Assets Cash..... Accounts receivable. Liabilities & Shareholders' Equity $ 7,000 $ 30,000 Accounts payable... $ 65,500 $ 63,000 67,500 60,000 Wages payable.. 37,000 47,500 Inventory..... Prepaid insurance. 49,000 22,500 Total current liabilities. 102,500 110,500 6,000 4,500 Bank loan payable 83,000 85,000 Total current assets 129,500 117,000 Capital stock 75,000 75,000 Building (net)... 187,500 190,000 Retained earnings 56,500 36,500 Total $317,000 $307,000 Total $317,000 $307,000 Revenues... Less: Cost of goods sold. Gross margin. Less: Depreciation expense. Wage expense Insurance expense Interest expense. Net income before taxes Less: Tax expense (30%). Net income... THE DANA POINT COMPANY Income Statements 2016 2015 $480,000 $430,000 250,000 240,000 230,000 190,000 22,000 22,000 90,000 86,000 16,000 16,000 6,600 6,800 95,400 59,200 28,600 17,800 $ 66,800 $ 41,400