Question 4

Based on the income statement and balance sheets below, please compute the lists of ratio below:-

i) Gross profit margin

ii) Operating profit margin

iii) Profit before tax margin

iv) Profit after tax margin

v) Current ratio

vi) Quick ratio

vii) Times interest earned ration

viii) Debt ratio

ix) Return on Assets

x) Return on Equity

Income Statement

Sales 50,000

Cost of good sold (12,000)

Gross Profit 38,000

Total operating expenses (10,000)

Operating Income 28,000

Interest expenses (4,000)

Profit before tax 24,000

Tax expenses (6,000)

Profit after tax 18,000

Balance Sheet

Cash 20,000

Account receivable 12,000

Inventory 10,000

Other current assets 2,000

Total Current Assets 44,000

Gross property plant and equipment 50,000

Accumulated depreciation (20,000)

Net property plant and equipment 30,000

Long term investment 12,000

Total Non Current Assets 42,000

Total Assets 86,000

Liabilities Account payable 38000

Total Liabilities and Equity 86000