Expert Answer :Assignment 3: Ratio Analysis

Solved by a verified expert :Assignment 3: Ratio AnalysisBy Wednesday, February 22, 2017 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 the M1: Assignment 3 Dropboxby Wednesday, February 22, 2017.Balance Sheet as of December 31, 2010Gary and CompanyCash $45Accounts payables $45Receivables 66Notes payables45Inventory159Other current liabilities21Marketable securities33Total current liabilities$111Total current assets$303Net fixed assets 147Long Term LiabilitiesTotal Assets $450Long-term debt 24Total Liabilities$135Owners EquityCommon stock$114Retained earnings201Total stockholders’ equity315Total liabilities and equity$450Income Statement Year 2010Net sales$795Cost of goods sold660Gross profit 135Selling expenses 73.5Depreciation12EBIT49.5Interest expense 4.5EBT45Taxes (40%) 18Net income271. Calculate the following ratios AND interpret the result against the industry average:RatioYour AnswerIndustry AverageYour Interpretation(Good-Fair-Low-Poor)Profit margin on sales3%Return on assets9%Receivable turnover16XInventory turnover10XFixed asset turnover2XTotal asset turnover3XCurrent ratio2XQuick ratio1.5XTimes interest earned7X2. 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.