DUE TOMORROW

Assignment 3: Ratio Analysis

By the due date assigned solve the problem below, calculate the ratios, interpret the results against the industry average, and fill in the table on the worksheet. Then, provide an analysis of how those results can be used by the business to improve its performance. Turn in your completed work to theSubmissions Area through the end of the day.Balance Sheet as of December 31, 2010Gary and CompanyCash  $45 Accounts payables  $45Receivables    66 Notes payables 45Inventory159 Other current liabilities 21Marketable securities33 Total current liabilities$111Total current assets $303   Net fixed assets  147 Long Term Liabilities Total Assets  $450 Long-term debt  24  Total Liabilities $135      Owners Equity   Common stock$114  Retained earnings201  Total stockholders’ equity315   Total liabilities and equity$450 Income Statement Year 2010  Net sales$795Cost of goods sold 660Gross profit  135Selling expenses  73.5Depreciation12EBIT49.5Interest expense  4.5EBT45Taxes (40%)  18Net income27 1. Calculate the following ratios AND interpret the result against the industry average:RatioYour AnswerIndustry AverageYour Interpretation
(Good-Fair-Low-Poor)Profit margin on sales 3% Return on assets 9% Receivable turnover 16X Inventory turnover 10X Fixed asset turnover 2X Total asset turnover 3X Current ratio 2X Quick ratio 1.5X Times interest earned 7X  2. Analysis:Give your interpretation of what the ratios calculations show and how the business can use this information to improve its performance. Justify all answers.