Consider the following questions:
1) What is the formula for Return on Assets?
Net Income = 5,000 Total Assets = 50,000; What is the return on assets?
2) What is the formula for Return on Equity
Net Income = 5,000 Shareholder's Equity = 100,000; What is the return on equity
3) What is the formula for Operating Margin?
EBIT=10,000 Net Sales = 200,000; Calculate the Operating Margin
4) Calculate Average Day's Sales
Net Sales = 450,000
Calculate Average Days Receivables Outstanding
Accounts Receivable= 45,000 (use avg day sales, per above calculation)
5) Calculate Inventory Turnover
Cost of Goods Sold = 100,000
Average Inventory = 12,000
6) Calculate Average Day's Inventory Held
365/ Inventory Turnover (from above calculation)
7) What does the Current Ratio tell you?
8) What does the Debt to Equity Ratio tell you?
9) What is a percentage format financial statement?
10) Give an example of a Solvency ratio.