Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment. Compute the current ratio . Compute the…

Using the Exhibit A document, compute the following ratio, compare it to the industry average, and comment.

Compute the current ratio.

Compute the quick ratio.

Compute days in inventory.

Compute days outstanding in accounts receivable.

Compute the gross margin.

Compute the net income percentage.

Compute the long term debt to equity ratio.

Compute the interest coverage.

Compute the ROA

Compute the ROE.

Compute the ROE using the DuPont Model.

Exhibit A

James Trading Corporation

Balance Sheet

December 31, 20XX

Assets

$

Liabilities and Equity

$

 Cash

23,015

Accounts receivable

 141,258

 Accounts payable

 184,372

Inventory

 212,444

 Long term debt

 168,022

Total current assets

 376,717

 Total liabilities

 352,394

Net Plant and equipment

 711,256

 Common Stock

 313,299

Other assets

 89,879

 Retained earnings

 512,159

 Total equity

 825,458

Total Assets

$1,177,852

 Total Liabilities and Equity

 $1,177,852

James Trading Corporation

Income Statement

December 31, 20XX

Income Statement

$

 Sales

 $2,130,000

 Cost of goods sold

 (1,015,000)

 Gross margin

 1,115,000

 Operating expenses

 (878,000)

 Depreciation

 (16,030)

 Operating income

 220,970

 Interest expense

 (10,011)

 Earnings before taxes

 210,959

 Income taxes

 (54,000)

 Net income

 $156,959

Industry Average Ratios

Item

Ration

 Current ratio

 2.1

 Quick ratio

 0.8

 Days in inventory

 92

 Days in accounts receivable

 63

 Gross margin

23.9%

 Net margin

12.3%

 Long term debt to equity ratio

 1.0

 Interest coverage

 5.6

 ROA

5.3%

 ROE

18.8%

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