Answer:
e. The average sales period = (average balance inventory / COGS) x 365 days = {[($1,065,000 + $715,000)/2] / $3,995,000} x 365 days = 81.3 days
f. The operating cycle = average sales period + (average accounts receivable / total credit sales) x 365 days = 81.3 + {[($633,000 + $420,000)/2] / $5,600,000} x 365 days = 81.3 + 34.3 = 115.6 days
g. The total asset turnover = total sales / average assets = $5,600,000 / [($3,815,200 + $2,959,000)/2 = 1.66 times
h. The debt-to-equity ratio = total liabilities / total equity = $1,670,000 / $2,145,200 = 0.778 or 77.8%
i. The times interest earned ratio = EBIT / interest expense = $928,000 / $102,000 = 9.1
j. The equity multiplier = total assets / total equity = $3,815,200 / $2,145,200 = 1.78
