P10-6B. Calculate and analyze financial ratios. (LO 3)
The following information was taken from the annual report of ROM’
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At Decembe3r1 |
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ASSETS: |
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Current assets: |
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Cash |
$1,220 |
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Accounts receivable |
3,112 |
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Merchandise inventory |
966 |
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Prepaid expenses |
149 |
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Total current assets |
5,447 |
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Plant and equipment: |
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Buildings net |
2,992 |
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Equipment net |
1,045 |
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Total plant and equipment |
4,037 |
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Total assets |
$9,484 |
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LIABILITIES: |
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Current liabilities: |
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Accounts payable |
$ 1,685 |
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Notes payable |
1,100 |
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Total current liabilities |
2,785 |
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Long- term liabilities |
2,000 |
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Total liabilities |
4,785 |
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Stockholder’s Equity |
|
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Common stock, no par value |
3,042 |
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Retained earnings |
1,657 |
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Total stockholder’s equity |
4,699 |
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Total liabilities and stockholder’s equity |
$9,484 |
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Sales of the year |
10,200 |
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Cost of goods sold |
6,750 |
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Total assets at Dec. 31, 2007 |
8,980 |
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Total liabilities at Dec. 31, 2007 |
4,535 |
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Total stockholder’s equity at Dec. 31, 2007 |
4,445 |
Required
a. Calculate the following ratios for 2008:
1. Debt-to-equity ratio
2. Gross profit percentage
3. Current ratio
4. Acid-test ratio
b. What do the ratios indicate about the success of ROM? What additional information would be useful to help you analyze the overall performance of this company?