Calculate Zumwalt’s net profit margin and debt ratio. Earth’s Best Company has sales of $200,000, a net income of $15,000, and the following balance sheet: Cash $10,000 Receivable 50,000 Inventories 150,000 Net fixed assets 90,000 Total assets $300,000 Account payable $30,000 Other current liabolities 20,000 Long-term debt 50,000 Common equity 200,000 Total liabilities and equity $300,000 C. Explain how we could have set the problem up to have you focus on chang- ing accounts receivable, or fixed assets, or using the funds generated to retire debt (we would give you the interest rate on outstanding debt), or how the original problem could have stated that the company needed more invento- ries and it would finance them with new common equity or with new debt.
Calculate Zumwalt’s net profit margin and debt ratio. Earth’s Best Company has sales of $200,000, a net income of $15,000, and the following balance sheet:
Cash $10,000
Receivable 50,000
Inventories 150,000
Net fixed assets 90,000
Total assets $300,000
Account payable $30,000
Other current liabolities 20,000
Long-term debt 50,000
Common equity 200,000
Total liabilities and equity $300,000
C. Explain how we could have set the problem up to have you focus on chang- ing accounts receivable, or fixed assets, or using the funds generated to retire debt (we would give you the interest rate on outstanding debt), or how the original problem could have stated that the company needed more invento- ries and it would finance them with new common equity or with new debt.
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