The following financial statements were taken from the 2010 annual report of Presentations Company:

Presentations Company
Income Statement
For the Year Ended December 31, 2010

Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,228
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,751
Gross profit on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,477
Operating expenses: Depreciation— buildings and equipment . . . . . . . . . . . . . 102
Other selling and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,667
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,769
Income before interest and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 708
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 426

Requirements
1. Calculate the following ratios for the year ended December 31, 2010.
a. Debt- to- equity ratio
b. Gross margin percentage
c. Current ratio
d. Profit margin ratio
2. What do the ratios indicate about the success of Presentations? What additional information would help you analyze the overall performance of thiscompany?

Transcribed Image Text:

Presentations Company Balance Sheets lin thousanda) Decem ber 31, 2010 December 31, 2009 Current assets: Cash 1,617 Accounts recelvable Merchandise Inventory..2,070 $1,220 3,112 ,925 149 Total current assets Plant and equtpment: 580 $2,992 1,045 5,750 Total assets ....*..*..$11.550 Current liabilities $1,685 Total current labllities 2,717 2,785 6,217 STOCKHOLDERS' EQUITY $3,042 1,943 Total stockholders' equity...5333