4.(TCO B) Use the following current year financial statements for Sambora Engineering to perform ratio analysis.Sambora Engineering Income Statement Revenue $3,400,000Cost of goods sold 1,100,000Gross profit 2,300,000Operating expenses 1,400,000Operating income (EBIT) 900,000Interest expense 350,000Earnings before taxes 550,000Taxes (at 40%) 220,000Net income $330,000Sambora Engineering Balance Sheet Current assets Cash $800,000 Accounts receivable 450,000Inventory 150,000Total current assets 1,400,000Non-current assetsFixed assets 5,000,000Accumulated depreciation (1,250,000)Net fixed assets 3,750,000Total assets $5,150,000Current liabilitiesAccounts payable $970,000 Accrued liabilities 180,000Total current liabilities 1,150,000Non-current liabilities Bonds payable 1,000,000Total liabilities 2,150,000Common stock 300,000Retained earnings 2,700,000Total shareholders’ equity 3,000,000Total liabilities and shareholders’ equity $5,150,000(a) Calculate the firmâ€™s total-debt-to-assets ratio. Assume that the firmâ€™s prior year-end total liabilties balance was $2.4 million and the firm’s prior year-end total assets balance was $5 million.(b) Calculate the firmâ€™s net working capital.(c) What is the number of â€œdays in inventoryâ€ for Sambora Engineering? Assume that the firmâ€™s year-end inventory balance for the prior year was $100,000.(d) What is the firmâ€™s return on equity at the end of this year? Assume that the firmâ€™s year-end shareholders’ equity balance for the prior year was $2,600,000.
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