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E4-5A. Profitability, Liquidity, and Solvency Ratios Alex Corporation gathered the following information LO3, 4, 6 from its f
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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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