Balance Sheet Data Income Statement Data Cash $700,000 Accounts payable $840,000 Sales $14,000,000 Accounts receivable 1,400,000 Accruals 280,000 Cost of goods sold 7,000,000 Inventory 2,100,000 Notes payable 1,120,000 Gross profit 7,000,000 Current assets 4,200,000 Current liabilities 2,240,000 Operating expenses 3,500,000 Long-term debt 3,640,000 EBIT 3,500,000 Total liabilities 5,880,000 Interest expense 571,200 Common stock 980,000 2,928,800 Net fixed assets 5,600,000 Retained earnings 2,940,000 Taxes 732,200 Total equity 3,920,000 Net income $2,196,600 Total assets $9,800,000 Total debt and equity $9,800,000 Ratios Value Correct/Incorrect Ratios Value Correct/Incorrect Profitability ratios Asset management ratio Gross profit margin (%) 50.00 Total assets turnover 1.43 20.92 Operating profit margin (%) Net profit margin (%) 22.41 Financial ratios Return on equity (%) 53.52 Equity multiplier 1.67 Ratios Calculation Value Profitability ratios Numerator Denominator Gross profit margin (%) Operating profit margin (%) = Net profit margin (%) / Return on equity (%) Asset management ratio Total assets turnover Financial ratios Equity multiplier / =