(Financial statement analysis) Lopez Electronics' management has long viewed TKO Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheets and income statements for the two firms are as follows:

Lopez Electronics, Inc. Balance Sheet ($000)

TKO Electronics, Inc. Balance Sheet ($000)

Cash

$2,000

$1,500

Accounts receivable

4,500

6,000

Inventories

1,500

2,500

Current assets

$8,000

$10,000

Net fixed assets

16,000

25,000

Total assets

$24,000

$35,000

Accounts payable

$2,500

$5,000

Accrued expenses

1,000

1,500

Short-term notes payable

3,500

1,500

Current liabilities

$7,000

$8,000

Long-term debt

8,000

4,000

Owners' equity

9,000

23,000

Total liabilities and owners' equity

$24,000

$35,000

Lopez Electronics, Inc. Income Statement ($000)

TKO Electronics, Inc. Income Statement ($000)

Net sales (all credit)

$48,000

$70,000

Cost of goods sold

-36,000

-42,000

Gross profit

$12,000

$28,000

Operating expenses

-8,000

-12,000

Net operating income

$4,000

$16,000

Interest expense

-1,150

-550

Earnings before taxes

2,850

15,450

Income taxes (40%)

-1,140

-6,180

Net income

$1,710

$9,270

1. Calculate the following ratios for both Lopez and TKO:

Current ratio

Times interest earned

Inventory turnover

Total asset turnover

Operating profit margin

Operating return on assets

Debt ratio

Average collection period

Fixed asset turnover

Return on equity