Identify and calculate two ratios

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a. ABC Corporation manufactures and sells sports equipment. An income statement and partial balance sheet for the year 2018 is presented below:

ABC Corp.

Income Statement

year ended December 31, 2018

Sales                                                                                                   $ 68,480

Cost of goods sold                                                                                54,434

Operating expenses                                                                               10,211

Interest expense                                                                                        440

Tax expense                                                                                            1,358

Net earnings                                                                                         $ 2,037

ABC Corp.

Partial Balance Sheet

December 31, 2018

Inventory                                                                                                        $ 821

Current assets                                                                                                 2,411

Non-current assets                                                                                         5,750

Current liabilities                                                                                              660

Long-term debt                                                                                              5,700

Shareholders' equity                                                                                      1,801

i) Identify and calculate two ratios from each of the following three categories: activity (productivity) ratios; profitability (efficiency) ratios; and liquidity ratios.

ii) Based on the DuPont approach, indicate whether you expect return on assets (ROA) to exceed return on equity (ROE) or ROE to exceed ROA. Support your answer with calculations

Reference no: EM132273019

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