Part 1

Compute the ratios in the schedule below as per the schedule at the end of the question.

Part 2

Compare to the Industry average provided by identifying if the company is better or worse than the industry ( No explanation necessary)

Part 3

Explain the meaning and implication of the following ratios only. ( Average Collection Period, Current Ratio and Deb to Total Assets ratio)

The Statement of AltEn are below

Balance Sheet
Assets			Liabilities
Cash		$15,000	Accounts Payable	$21,000
Accts. Receivable		22,000	Notes Payable	20,000
Inventory		30,000	Accrued Expenses	5,000
Current Assets		67,000	Current Liabilities	46,000
Net Capital Assets		73,000	Long-term Debt	30,000
			Shareholders Equity	64,000
Total Assets		$140,000	Total Equity & Liabilities	$140000
	Income Statement
	Sales: (80% credit)		$120,000
	Less: Cost of Goods Sold		45,000
	Gross Profit		75,000
	Selling and Administrative Expense	20,000
	Rent Expense (Lease)	8,000	28,000
	EBIT		47,000
	Interest Expense		5,000
	Earnings before taxes		42,000
	Taxes (@ 25%)		10,500
	Net Income		$31,500
	Common shares outstanding		15,000
	EPS		$2.1/Share

Ratio	Ratios to calculate	Industry Average	Better or Worse from Industry
Profit margin		17.5%
Return on equity		35%
Receivables turnover		4.4x
Avg. collection period		68.0 days
Inventory turnover		3.5x
Current ratio		1.28
Quick ratio		.85
Debt to total assets		.45
Times interest earned		12.0x