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