Use the below information from the tables to work out the following missing entries, and then calculate the company’s return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values.

Long-term debt ratio	0.3
Times interest earned	10.0
Current ratio	1.2
Quick ratio	1.0
Cash ratio	0.4
Inventory turnover	3.0
Average collection period	73	days

INCOME STATEMENT
(Figures in $ millions)
Net sales	$
Cost of goods sold
Selling, general, and administrative expenses	20.00
Depreciation	30.00
Earnings before interest and taxes (EBIT)	$
Interest expense
Income before tax	$
Tax (35% of income before tax)
Net income	$

BALANCE SHEET
(Figures in $ millions)
		This Year			Last Year
Assets
Cash and marketable securities		$			$ 30
Accounts receivable					44
Inventories					36
Total current assets		$			$ 110
Net property, plant, and equipment					35
Total assets		$			$145
Liabilities and shareholders’ equity
Accounts payable		$35.00			$ 30
Notes payable		40.00			45
Total current liabilities					75
Long-term debt					26
Shareholders’ equity					44
Total liabilities and shareholders’ equity		$195.00			$145

Answer rating: 100% (QA)

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