4:55 7 .1 4G X RATIOS INTERPRETATIONS.docx . . . Exercise 1 Following the financial statement calculate the ratios and interpret results comparing to the industry average: profit margin (6.7%) /return on assets (10%)/Return on Equity (ROE) (15%)/ Receivables turnover (10 times)/ Average collection period (36 days) /inventory turnover (7 times)/ Average age of inventory (40 days) / Fixed asset turnover(5.4 times per year) /Total Assets Turnover(1.5 times per year ) / Current Ratio (2.1 times a year)/ Quick Ratio (1.2 times a year)/Debt to total assets (33%)/ Times Interest earned(7 times)/ fixed payment coverage ratio(5.5 times) SAXTON COMPANY Income Statement For the Year Ended December 31, 2010 Sales fall on croda) $4,000,000 Cost of goods bold 3.000.000 Gross profit 1.000,090 Bolling and adminis 450,000 Operating profit 560,000 Interest expono 60.000 Extmordinary loss 200,000 Not Income before taxes 300.000 Taxes (3394) . 100,000 Not Income $ 200.000 Includes 100.000 in less Balance Shoot As of December 31, 2010 Assets Cann com 20.000 Marketable securities 50,000 Accounts receivable 350,000 Inventory ................ 370.000 Total current assets 800,000 Not plant and equipment 800,000 Not asnots $1.800,000 Liabilities and Stookholders' Equity Accounts payable 50,000 Notes payable 250.000 Total current liabilities 300,000 Long-term liabilities 300,000 Total liabilities 800,000 Common stock 400,000 Retained earnings 600,000 Total liabilities and stockholders' equity $1-600.000