Here are simplified financial statements for Phone Corporation in a recent year:   INCOME STATEMENT(Figures in $ millions) Net sales $ 12,500 Cost of goods sold  3,710 Other expenses  4,112 Depreciation  2,308 Earnings before interest and taxes (EBIT) $2,370 Interest expense  650 Income before tax $1,720 Taxes (at 30%)  516 Net income $1,204 Dividends $806   BALANCE SHEET(Figures in $ millions)  End of Year  Start of Year Assets        Cash and marketable securities $82   $151  Receivables  2,032    2,350  Inventories  152    203  Other current assets  832    897  Total current assets $3,098   $3,601  Net property, plant, and equipment  19,903    19,845  Other long-term assets  4,146    3,700  Total assets $27,147   $27,146    Liabilities and shareholders' equity        Payables $2,494   $2,970  Short-term debt  1,384    1,538  Other current liabilities  776    752  Total current liabilities $4,654   $5,260  Long-term debt and leases  8,761    8,086  Other long-term liabilities  6,108    6,079  Shareholders' equity  7,624    7,721  Total liabilities and shareholders' equity $27,147   $27,146    Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year

Net Operating Profit after tax = EBIT * (1 - Tax Rate)
= $2,370* (1 - 0.30)
Net Operating Profit after tax = $1,659.0

a) Return on Equity:

Average Stockholders' Equity = ($7,624+ $7,721) / 2 = $7,672.5

Return on Equity = Net Income / Average Stockholders' Equity
 = $1,204/ $7,672.5
Return on Equity = 15.69%

b) Return on Assets:

Average Total Assets = ($27,147+ $27,146) / 2 = $27,146.5

Return on Assets = Net Operating Profit after tax / Average Total Assets
 = $1,659/ $27,146.5
Return on Assets = 6.11%

c) Return on Capital:

Average Capital = Average Long-term Debt and Leases + Average Stockholders' Equity
= ($8,761+ $8,086) / 2 + ($7,624+ $7,721) / 2
Average Capital = $16,096

Return on Capital = Net Operating Profit after tax / Average Capital
 = $1,659 / $16,096
Return on Capital = 10.30%

d) Days in Inventory:

Days in Inventory = 365 * Inventory / Cost of Goods Sold
 = 365 * $203 / $3,710
Days in Inventory = 19.97days

e) Inventory Turnover:

Inventory Turnover = Cost of Goods Sold / Inventory
 = $3,710/ $203
Inventory Turnover = 18.27times

f) Average Collection Period:

Average Collection Period =Beginning Receivables/Sales*365

= 2350/12500*365

Average Collection Period = 68.62 days

g) Operating Profit Margin:

Operating Profit Margin = EBIT*(1-Tax Rate)/Sales

= 2370*(1-30%)/12500

Operating Profit Margin = 13.27% 

h) Long-term Debt Ratio:

Long-term Debt Ratio = Long-term Debt at the End/Total Assets at the End 

= (8761+6108)/27147

= 14869/27147 

Long-term Debt Ratio = 0.55 times

i) Total Debt Ratio:

Total Debt Ratio = Total Liabilities / Total Assets 

= (4654+8761+6108)/27147

= 19523/27147

Total Debt Ratio = 0.72 times

j) Times-Interest Earned Ratio:

 Times-Interest Earned Ratio = EBIT/Interest

= 2370/650 

 Times-Interest Earned Ratio = 3.65 times

k) Cash Coverage Ratio:

Cash Coverage Ratio = (EBIT+Depreciation)/Interest

= (2370+2308)/650

= 4678/650

Cash Coverage Ratio = 7.20 times

l) Current Ratio:

Current Ratio = Current Assets at the End / Current Liabilities at the End 

= 3098/4654

Current Ratio =  0.67:1

m) Quick Ratio:

Quick Ratio = Quick Assets/Current Liabilities

= (82+2032)/4654

= 2114/4654

Quick Ratio = 0.45:1