Calculate the cash flow to sales ratio and debt ratio

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Reference no: EM133069952

Question - Lantana Landscape Supplies provides the following information for 2021.

Current Assets $225,075

Total Assets $420,675

Current Liabilities $156,240

Total Liabilities $187,740

Total Equity $232,935

Net Cash from operating activities $97,500

Sales Revenue $262,500

Cost of Sales $207,500

Profit $25,000

Required -

(a) Calculate the following

i. Current ratio

ii. Debt to Equity ratio

iii. Cash flow to sales ratio

iv. Gross profit margin

v. Debt ratio

vi. Cash flow ratio

(b) With reference to the ratios calculated, discuss each of following aspects of the business

i. Liquidity

ii. Solvency

(c) Discuss why average values of balance sheet items are used in calculation of some ratios, such as Return on Assets.

Reference no: EM133069952

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