Lil’Orphan Annie has a business called Big Daddy Warbucks, LLC (Hereinafter referred to as “Big D”). She started this business 3 years ago and has been growing each year. It was a tough go the first couple of years but she believes that last year is indicative of what the business can do. For your use, she provided the attached financial statements for the years ending December 31St 2012 and 2011. Shown below are the general formulas and industry standards you will need to analyze and answer Annie’s questions.

Calculate the Following Ratios for Big D

(Round your answers to 2 decimal places) Big D’s Industry

Solvency Ratios:

1. Current Ratio

2. Quick Ratio Leverage Ratios:

3. Debt to Equity

4. Debt to Assets Profitability Ratios:

5. Gross Profit

6. Operating Profit

7. Return on Assets

8. Return on Equity Asset Management Ratios:

9. Inventory Turnover

10. Days of Inventory

11. Accounts Receivable Turnover

12. Days of Accounts Receivable

13. Operating Cycle

14. Asset Turnover

15. If Annie’s inventory proved to be obsolete and un-salable – Would she be able to pay her bills during the next year?

a. Yes

b. No

16. Which ratio did you use to answer #15 above?

a. Current Ratio

b. Operation Profits %

c. Quick Ratio

d. Asset Turnover

17. If she has a product that cost $3.74 per unit and she wants to make the same gross profit that she has – At what price must she sell this product for?

a. 1.25

b. 4.99

c. 0.86

d. 4.68

18. Her mentor Big Daddy Warbucks, is always on the prowl for a good investment and has offered to loan Annie all the money she needs but at an interest rate of 9%. Should she borrow any of this money?

a. Yes

b. No

19. Which ratio did you use to answer #18 above?

a. Operating Cycle

b. Return on Equity

c. Gross Profit %

d. Return on Assets

20. Which of the following ratios would be an indicator that credit terms offer her customers is

very restrictive?

a. Quick Ratio

b. Accounts Receivable Turnover

c. Return on Assets

d. Operating Profit %ACCT 3303

21. Which ratio indicates that Annie is pretty good at managing her expenses?

a. Inventory Turnover

b. Operating Profit %

c. Current Ratio

d. Return on Equity

22. Which ratio indicates that Annie is at risk of being out of stock and missing a sale?

a. Asset Turnover

b. Gross Profit %

c. Quick Ratio

d. Inventory Turnover

23. Which ratio would you use to determine the number of days it takes Annie to turn inventory

into Cash?

a. Operating Cycle

b. Return on Assets

c. Debt to Assets

d. Current Ratio

24. What do plan to do this Thanksgiving?

a. Visit Family and Friends

b. Rest and Relaxation

c. Have Fun

d. Enjoy Life