Homework Answers
ANSWER
1. RETURN ON SALES RATIO = NET INCOME / SALES * 100
= $35,000 / $175,000 * 100
= 20%
2. CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
= $47,250 / $27,000
= 1.75 : 1
3. DEBT TO TOTAL ASSETS RATIO = TOTAL LIABILITIES / TOTAL ASSETS * 100
= $94,500 / $135,000 * 100
= 70%
4. FREE CASH FLOW = CASH FLOW FROM OPERATING ACTIVITIES - EXEPNDITURE ON PP&E
= $40,000 - $15,000
= $25,000
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