The simplified balance sheet and income statement for a company appear below.

Income Statement
For the Year Ended December 31, 2011
Net sales ................ $415,000
Cost of goods sold ............. 250,000
Gross margin ...............$165,000
Operating expenses ............ 130,000
Net income ...............$ 35,000
Total assets and owner's equity at the beginning of 2011 were $180,000 and $140,000, respectively. The owner made no investments or withdrawals during the year.
1. Compute the following liquidity measures:
(a) Working capital and
(b) Current ratio.
2. Compute the following profitability measures:
(a) Profit margin,
(b) Asset turnover,
(c) Return on assets,
(d) Debt to equity ratio, and
(e) Return onequity.

Transcribed Image Text:

Balance Sheet December 31, 2011 Assets Llabliltles Current assets Investments Property, plant. S55,000 10,000 Current liabilities Long-term liabilities Total liabilities 25,000 30,000 55,000 and equipment 46,500 18,500 Intangible assets Owner's Equity 175,000 Owner's capital Total liabilities Total assets $230,000 and owner's equity $230000