Balance XYZ Company is as follow

Assets:

Cash and marketable securities $300,000

Accounts receivable 1,125,000

Inventories 1,837,500

Expenses paid in advance 24,000

Total current assets $3,286,500

Fixed assets 2,700,000

Less: accumulated depreciation 1,087,500

Net fixed assets $1,612,500

Total assets $4,899,000

Passive:

Accounts payable $240,000

Unpaid documents 825,000

Accrued taxes 42,000

Total current liabilities $1,107,000

Long-term debt 975,000

Owner's equity 2,817,000

Total Liabilities and Owner's Equity $4,899,000

XYZ Income Statement

Net sales (all credit) $6,375,000

Less: Cost of goods sold 4,312,500

Selling and administrative expenses 1,387,500

Depreciation expense 135,000

Interest expense 127,000

Profit before taxes $412,500

Income taxes 225,000

Net income $188,000

Common stock dividends $97,500

Change in retained earnings $90,500

Determine the following financial "reasons." Please interpret them.

1. Radio actual
2. debt ratio
3. Average collection period (using a 365-day year)
4. times interest earned
5. gross profit margin
6. operating profit margin
7. net profit margin
8. Inventory sales volume
9. Fixed asset turnover
10. gross profit margin
11. Return on equity

Answer rating: 100% (QA)

Here are the financial ratios for XYZ Company Debt ratio Longterm debt Total curr... View the full answer