Illustrated the calculation of financial ratios using the financial statements of Chloe'sCoatS, a manufacturer and marketer of clothing. Tinker'sTrouserS also manufactures clothing. Given selected financial data for Tinker'sTrouserS, calculate the following financial ratios:

a) Liquidity ratios: the current ratio and quick ratio

b) Activity ratios: inventory turnover, receivables turnover, days sales outstanding (average collection period), fixed asset turnover, and total asset turnover

c) Profitability ratios: operating profit margin, net profit margin, return on assets, and return on equity

d) Leverage ratios: debt/equity ratio, debt ratio (total debt/assets)

e) Coverage ratios: times-interest-earned

Compare the numerical results with the values for ratios calculated for Chloe'sCoatS in the body of this chapter. Are there any obvious differences?

Balance Sheet (as of December 31, 20X1)
Current assets
Cash and cash equivalents	$1,330
Receivables	994
Inventories	1,329
Other current assets	229
Total current assets	3,882
Plant and equipment	2,484
Other noncurrent assets	5,717
Total assets	$11,983
Current liabilities	$2,648
Long-term liabilities	6,411
Equity	2,811
Total liabilities plus equity (Prior year's inventory: $1,452)	$11,983

Income Statement (for the fiscal year ending December 31, 20X1)
Sales	$11,649
Gross profit	7,650
Operating income	1,460
Interest expense	294
Taxes	243
Net income	$ 923

Answer rating: 100% (QA)

Liquidity ratios Current ratio Current assets Current liabilities 38822648 147 Quick ratio Cu... View the full answer