Using the 20x1 financial statements in Amerbran Company (A), Case 11-2, together with the 20x0 income statement shown in Exhibit 1 below, calculate the ratios listed below for 20x0 and 20x1. Use year-end amounts for ratios that involve balance sheet data. The company's interest expense in 20x0 and 20x1 was (in thousands) $105,165 and $102,791, respectively.
1. Return on assets.
2. Return on equity.
3. Gross margin percentage.
4. Return on sales.
5. Asset turnover.
6. Days' cash (20x1 only).
7. Days' receivables.
8. Days' inventories.
9. Inventory turnover.
10. Current ratio.
11. Acid-test ratio.
12. Debt/capitalization ratio.
13. Times interest earned.

Questions
1. Comment on Amerbran's treatment of excise taxes as part of the calculation of gross margin.
2. As an outside analyst, what questions would you want to ask Amerbran's management based on the ratios you have calculated?

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EXHIBIT 1 AMERBRAN COMPANY Income Statement For the Year Ended December 31, 20x0 (in thousands) Sales revenue, net Cost of sales Excise taxes on goods sold Gross margin Selling, general, and $6,577,480 2,573,350 2,354,350 1,649,780 administrative expenses Income before income taxes Provision for income taxes 974,121 675,659 296,877 s 378,782 Net income