ANALYSIS RATIO

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 Submissions Area through the end of the day.   

Balance Sheet as of December 31, 2010    Gary and Company    Cash     $45       Accounts payables     $45    Receivables       66       Notes payables    45    Inventory   159       Other current liabilities    21    Marketable securities   33       Total current liabilities    $111     Total 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 earnings   201            Total stockholders’ equity   315                Total liabilities and equity   $450         Income Statement Year 2010             Net sales   $795    Cost of goods sold    660    Gross profit      135    Selling expenses     73.5    Depreciation   12    EBIT   49.5    Interest expense     4.5    EBT   45    Taxes (40%)     18    Net income    27       1. Calculate the following ratios AND interpret the result against the industry average:   Ratio   Your Answer   Industry Average   Your 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.     Assignment 4 Grading Criteria   Maximum Points   Has correctly calculated the ratios.  40   Has correctly analyzed and interpreted the significance of the resulting ratios and suggested actions for improvement.  40   Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation  20   Total:  100