Liquidity, Financial leverage and Asset management.

Bus 401 principles of finance week 5 final paper

Liquidity:
Current Ratio = Current Assets / Current Liabilities = $2,162/ $1,270 = 1.7
Quick Ratio = (Current Assets – Inventory) / Current Liabilities = ($2,162 – 438) /$1,270= 1.3

Financial Leverage:
Debt to Equity Ratio = Total Liabilities/Total Equity= $2,434/$4,039= 0.6
Times Interest Earned (TIE) ratio = EBIT/Interest Expense=$780/$234= 3.34

Asset Management:
Inventory Turnover Ratio = Cost of Goods Sold/ Average Inventory balance=($719+$544)/($945+438)/2=$843/1391.5= 0.60 Return on Asset (ROA)= Net income/Average total assets=(786 + 857) /($5607+5834)/2= 2492/$5720.5= 0.435