1) Based on the balance sheet and income statement information given below, calculate the following financial ratios and explain briefly what the number you calculated means:

a) Current ratio

b) Acid-test ratio

c) Days in receivables

d) Debt ratio

e) Return on equity

Assets: Cash and marketable securities $600,000 Accounts receivable 900,000 Inventories 1,500,000 Prepaid expenses 75,000 Total current assets $3,075,000 Fixed assets 8,000,000 Less: accum. depr. (2,075,000) Net fixed assets $5,925,000 Total assets $9,000,000 Liabilities: Accounts payable Notes payable $800,000 700,000 Accrued taxes 50,000 Total current liabilities $1,550,000 Long-term debt Owner's equity (1 million shares of common stock outstanding) 2,500,000 4,950,000 Total liabilities and owner's equity $9,000,000 Net sales (all credit) $10,000,000 (3,000,000) Less: Cost of goods sold Selling and administrative (2,000,000) (250,000) (200,000) expense Depreciation expense Interest expense 4,550,000 Earnings before taxes (1,820,000) Income taxes Net income $2,730,000