What does a comparison of keystone to these averages

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Keystone Resources has a net profit margin of 8 percent and earnings after taxes of $2 million. Its current balance sheet is as follows:

a. Calculate Keystone's return on stockholders' equity.

b. Industry average ratios are

Net profit margin ........ 10%

Total asset turnover ...... 2.0 times

Equity multiplier ........ 1.5 times

What does a comparison of Keystone to these averages indicate about the firm's strengths and weaknesses?

c. Keystone has inventories of $3.2 million. Compute the firm's quickratio.

Reference no: EM131119818

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