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 Dana Dairy Products Key Ratio \text { Dana Dairy Products Key Ratio } Income Statement
Dana Dairy Products
for the Year Ended December

question 99

Multiple Choice

 Dana Dairy Products Key Ratio \text { Dana Dairy Products Key Ratio }
 Industry  Actual  Actual  Average 20012002 Current Ratio 1.31.0 Quick Ratio 0.80.75 Average collection Period 23 days 30 days  Inventory Turnover 21.719 Debt Ratio 64.7%50% Times Interest Earned 4.85.5 Gross Profit Margin 13.6%12.0% Net Profit Margin 1.0%0.5% Return on total assets 2.9%2.0% Return on Equity 8.2%4.0%\begin{array}{lll}\hline&\text { Industry } & \text { Actual } & \text { Actual } \\&\text { Average } & 2001 & 2002\\\hline\text { Current Ratio } & 1.3 & 1.0 \\\text { Quick Ratio } & 0.8 & 0.75 \\\text { Average collection Period } & 23 \text { days } & 30 \text { days } \\\text { Inventory Turnover } & 21.7 & 19 \\\text { Debt Ratio } & 64.7 \% & 50 \% \\\text { Times Interest Earned } & 4.8 & 5.5 \\\text { Gross Profit Margin } & 13.6 \% & 12.0 \% \\\text { Net Profit Margin } & 1.0 \% & 0.5 \% \\\text { Return on total assets } & 2.9 \% & 2.0 \% \\\text { Return on Equity } & 8.2 \% & 4.0 \%\end{array}
Income Statement
Dana Dairy Products
For the Year Ended December 31, 2002
 Sales Revenue $100,000 Less: Cost of Goods Sold 87,000 Gross Profits $13,000 Less: Operating Expenses 11,000 Operating Profits 2,000 Less: Interest Expense 500 Net Profits Before Taxes $1,500 Less: Taxes (40%) 600\begin{array} { l c } \hline \text { Sales Revenue } & \$ 100,000 \\\text { Less: Cost of Goods Sold } & 87,000 \\& - \cdots \\\text { Gross Profits } & \$ 13,000 \\\text { Less: Operating Expenses } & 11,000 \\& - \cdots \\\text { Operating Profits } & 2,000 \\\text { Less: Interest Expense } & 500 \\& - \cdots \\\text { Net Profits Before Taxes } & \$ 1,500 \\\text { Less: Taxes } ( 40 \% ) & 600\end{array}
Balance Sheet
Dana Dairy Products
December 31, 2002
ASSETS
 Cash $1,000 Accounts Receivable 8,900 Inventories 4,350 Total Current Assets $14,250 Gross Fixed Assets $35,000 Less: Accumulated Depreciation 13,250 Net Fixed Assets 21,750 Total Assets $36,000 Liabilities & Stockholders’ Equity  Accounts Payable $9,000 Accruals 6,675 Total Current Liabilities $15,675 Long-term Debts 4,125 Total Liabilities $19,800 Common Stock 1,000 Retained Earnings 15,200 Total Stockholders’ Equity $16,200 Total Liab. & S.E. $36,000\begin{array}{lr}\hline \text { Cash } & \$ 1,000 \\\text { Accounts Receivable } & 8,900 \\\text { Inventories } & 4,350\\&----\\\text { Total Current Assets } & \$ 14,250 \\\text { Gross Fixed Assets } & \$ 35,000 & \\\text { Less: Accumulated Depreciation } & 13,250 \\\text { Net Fixed Assets }&21,750\\&----\\\text { Total Assets }&\$36,000\\\\\text { Liabilities \& Stockholders' Equity }\\\hline\text { Accounts Payable } & \$ 9,000 \\\text { Accruals } & 6,675\\&----\\\text { Total Current Liabilities } & \$ 15,675 \\\text { Long-term Debts } & 4,125\\&----\\\text { Total Liabilities }&\$19,800\\\text { Common Stock } & 1,000 \\\text { Retained Earnings } & 15,200\\&----\\\text { Total Stockholders' Equity }&\$16,200\\&----\\\text { Total Liab. \& S.E. }&\$36,000\end{array}
-Using the modified DuPont formula allows the analyst to break Dana Dairy Products return on equity into 3 components:. Which of the following mathematical expressions represents the modified DuPont formula relative to Dana Dairy Products' 2002 performance? (See Figure 3.2)


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