Eleanor's Computers is a retailer of computer products. Using the financial data provided, complete the financial ratio calculations for 2010. Advise management of any ratios that indicate potential problems and provide an explanation of possible causes of theproblems.

Transcribed Image Text:

Industry Averages 2010 Financial Ratios 2008 2009 2010 Current ratio 1.65X 0.89X 60 days 3.90X 3.33X 1.35X 61.00% 1.70X 0.95X 65 days Average collection period Inventory turnover Fixed asset turnover Total asset turnover Debt ratio Times interest earned Gross profit margin Operating profit margin Net profit margin Return on total assets Return on equity 0.92X 60 days 4.20X 3.20X 140X 59.20% 4.20X 3.00x 1.37X 60.00% 4.75X 22.50% 12.50% 6.50% 8.91% 22.28% 23.00% 12.70% 6.00% 8.10% 20.74% 25.00 12.50% 6.10% 854% 20.93% Income Statement for Year Ended 12/31/10 Balance Sheet at 12/31/10 $1,500,000 1,200,000 300,000 100,000 $200,000 72,000 128,000 51,200 76,800 $ 125,000 275,000 325,000 725,000 $ 420,000 e's Cost of goods sold Gross profit as Accounts receivable Inventory Current assets Fixed assets (net) Total Assets Accounts payabl rating expenses Operating profit Interest expense Earnings before tax Income tax (0.4) Net Income 150,000 225,000 100,000 475,000 400,000 $ 875,000 270,000 $1145,000 Notes payable Accrued liabilities Current liabilitieS Long-term debt Total liabilities it Total liabiliies and equity