The simplified balance sheet and income statement for a company appear below.
Balance Sheet
December 31, 20××

Income Statement
For the Year Ended December 31, 20××
Net sales $410,000
Cost of goods sold 250,000
Gross margin $160,000
Operating expenses 135,000
Net income $ 25,000
Total assets and owner's equity at the beginning of 20×× were $180,000 and $145,000, 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 on equity.

Transcribed Image Text:

Assets Liabilities Current assets Investments Property, plant, and $50,000 10,000 Current liabilities Long-term liabilities Total liabilities $ 20,000 30,000 50,000 equipment Intangible assets 146,500 13,500 Owner's Equity Owners capital Total liabilities and 170,000 Total assets $220,000 owner's equity 220,000