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Q5. Modern Appliances Corporation has reported its financial results for the year ended December 31, 2011.

Modern Appliances Corporation
Income Statement for the Fiscal	31-Dec-11
Sales	5,398,412,000
Cost of goods sold	3,432,925,255
Gross profit margin	1,965,486,745
Selling, general, and admin. expenses	1,036,311,231
Depreciation	299,928,155
Operating income	629,247,359
Interest expense	35,826,000
EBT	593,421,359
Income taxes	163,104,554
Net earnings	430,316,805

Consolidated Balance Sheet Modern Appliances Corporation Balance Sheet as of December 31, 2011
Assets		Liabilities and Stockholders Equity
Cash and cash equivalents	$ 514,412,159	Short-term borrowing	$ 117,109,865
Accounts receivable	1,046,612,233	Trade accounts payable	466,937,985
Inventories	981,870,990	Other current liabilities	994,289,383
Other current assets	313,621,610
Total current assets	$2,856,516,992	Total current liabilities	$1,578,337,233
Net fixed assets	754,660,275	Long-term debt	1,200,691,565
		Total liabilities	$2,779,028,798
Goodwill	118,407,710	Common stock	397,407,352
Other assets	665,058,761	Retained earnings	1,218,207,588
		Total equity	1,615,614,940
Total assets	$4,394,643,738	Total liabilities and stockholders equity	$4,394,643,738

Using the information from the financial statements, complete a comprehensive ratio analysis for Modern Appliances Corporation.

a. Calculate these liquidity ratios: current and quick ratios. (0.2 mark)

b. Calculate these efficiency ratios: inventory turnover, total asset turnover. (0.2 mark)

d. Calculate these leverage ratios: total debt ratio, debt-to-equity ratio, Equity multiplier. (0.2 mark)

e. Calculate these profitability ratios: gross profit margin, net profit margin, ROA, ROE. (0.2 mark)

f. Use the DuPont identity, and after calculating the component ratios, compute the ROE for this firm. (0.2 mark