Question

What is the company’s financial position? Please refer to the income statement and balance sheet for the Exceptional Service Grading Company available here. Using the learning resources provided in the Reading Assignment, perform a financial ratio analysis of the company using the following ratios: • Gross profit margin • Current ratio • Debt ratio

Answer 1

Answer:

Gross profit margin requires revenue and gross profit of the company.

Current ratio = 1.386 x

Debt ratio = 0.123 x

Explanation:

Gross profit margin requires revenue and gross profit of the company which is provided in the question but it can be calculated using this formula ; Total revenue / gross profit . where Gross profit = Revenue - cost of goods sold

Current ratio is calculated using the formula ; current assets/ current liabilities lets assume the left column is for the most recent year then current ratio =  4612200/3325950 = 1.386x

Debt ratio is calculated using the formula ; total debts/total assets lets assume once more that the left column is the most recent year. note; total debts = long term + current notes payable  = 454800 + 277550

therefore debt ratio = 732350 / 5957800 = 0.123x

attached is the income statement and balance sheet