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Cookie Creation 18

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(a)    Calculate the following ratios.

        1.   Current ratio                                      6.   Gross profit rate

        2.   Accounts receivable turnover           7.   Profit margin

        3.   Inventory turnover                             8.   Asset turnover

        4.   Debt to assets ratio                          9.   Return on assets

        5.   Times interest earned                     10.   Return on common stockholders' equity

(b)   Comment on your findings from part (a).

(c)    Based on your analysis in parts (a) and (b), do you think a bank would lend Cookie & Coffee Creations Inc. $20,000 to buy the additional equipment? Explain your reasoning.

(d)   What alternatives could Cookie & Coffee Creations consider instead of bank financing?


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