Using the income statement for the Sports Car Tire Company, compute the following ratios:
a. The interest coverage
b. The fixed charge coverage
The total assets for this company equal $40,000. Set up the formula for the DuPont system of ratio analysis, and compute c, d, and e.
c. Profit margin
d. Total asset turnover
e. Return on assets (investment)

THE SPORTS CAR TIRE COMPANY
Sales...........................................................$20,000
Less: Cost of goods sold .... . .......... . .. . .......9,000
Gross profit. ............................... . ................11,000
Less: Selling and administrative expense.......4,000
Less: Lease expense ...................... ...............1000
Operating profit* ........... . ...............................6,000
Less: Interest expense .... . .. ........ . . . .. . ........500
Earnings before taxes ...... . .. ........ . .. .. . .....5,500
Less: Taxes (40%) ........ . ...............................2,200
Earnings after taxes ..................... . .............$ 3,300
*Equals income before interest and taxes.