1. Net Working capital = Current assets current liabilities _________________ (2 pts)

2. Return on Equity (ROE) = Net Income / Equity _________________ (2 pts) 3. Current Ratio = Current Assets / current liabilities _________________ (2 pts)

4. Asset turnover = Sales/ average total assets _________________ (2 pts)

5. Inventory Turnover = Cost of goods sold / Inventory at start of year _________________ (2 pts)

Use the following Financial Statements to calculate each ratio listed for 12/31/2011. Use 365 day year. Use Income Statement Sales Cost of Good Sold Gross Profit 12/31/2011 200,000 150,000 50,000 Balance Sheet Cash Marketable Securities Accounts Receivable Inventory Total Current Assets 12/31/2011 30,000 20,000 35,000 80,000 165,000 12/31/2010 25,000 22,000 29,500 70,000 146,500 Selling and Administrative exp Depreciation Expense Operating Profit (EBIT) 20,000 2,500 27,500 Net Plant and Equipment Total Assets 100,000 265,000 102,500 249,000 Interest Expense 4,500 Earnings Before Taxes (EBT) 23,000 Accounts Payable Notes Payable Total Current Liabilities 50,000 18,000 68,000 45,000 17,000 62,000 Tax (35%) Net Income 8,050 14,950 Long Term Liabilities Total Liabilities 90,000 158,000 93,000 155,000 Dividends Paid Increase in Retained Earnings 1,950 13,000 Common Stock Retained Earnings Total Liabilities & Equity 17,000 90,000 265,000 17,000 77,000 249,000