Question

1. This question is based on the information provided in the abbreviated year-end Income Statement and abbreviated year-end Balance Sheet for NMC Corporation shown below.

NMC Corporation Income Statement for the Calendar Year (January 1 - December 31)	Thousands of dollars (except stock price, earnings per share, and dividends per share)
Net sales	$3000
Cost and expenses:	$2734
EBIT	$266
Less interest expense:	$66
Earnings before taxes	$200
Taxes	$80
Net income before preferred dividends	$120
Dividends to preferred stockholders	$8
Net income available to common stock holders	$112
Per share common stock:
Stock Price	$26.50
Earnings per share	$2.24
Dividends per share	$1.84

NMC Corporation Balance Sheet (Average of beginning and end of year)	Assets (thousands of dollars)		Liabilities and Equity (thousands of dollars)
Cash	$50	Accounts payable	$60
Market securities	$0	Notes payable	$100
Accounts receivable	$350	Accrued Wages	$10
Inventories	$300	Accrued Taxes	$130
Total Current Assets:	$700	Total Current Liabilities:	$300
Net plant and equipment:	$1300	Total Long Term Debt:	$800
		Total Stock Holder’s Equity:	$900
Total Assets:	$2000	Total liabilities and equity:	$2000

8a. Calculate the NMC financial ratios contained in the following table

Financial Ratios	NMC Values	Industry Values
Current Ratio		2.5 times
Quick (Acid) Ratio		1.0 times
Total Debt to Total Assets		40%
Return on Assets (ROA)		9%

Answer 1

rate positively ..

ans 1	Current ratio = Current asset /Current liabilities
	Current asset	$700
	Current liabilities	$300
	Current ratio =	2.3	time
ans 2	Acid ratio = (current asset - inventory)/Current liabilities
	Current asset	700
	Inventory	$300
	CA - Inventory =	$400
	Current liabilities	300
	Acid ratio =	1.3	time
ans 3	Total debt to asset
	Total debt=	$1,100
	Total asset =	$2,000
	Debt to asset =	55.00%
ans 4	ROA = Net income / Total asset
	Net income	120
	Total asset	$2,000
	ROA =	6.00%