Selected data from Switzer Furniture, Inc., follows.

Industry averages have been gathered for several ratios.

Requirements

1. Perform a trend analysis on Switzer’s sales revenue, inventory, and receivables over the past three years, using 2015 as the base. Is the trend in each of these areas favorable or unfavorable for the company?

2. Using the industry averages as benchmarks, analyze Switzer’s performance over the past three years in the following areas:

a. Liquidity

b. Turnover

c. Overall debt payment ability

d. Profitability

3. Evaluate Switzer’s quality of earnings. Are there any red flags in your analysis? Explain.

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Selected balance sheet data 2018 2017 2016 2015 $ 2,750 $ 3,200 $ 4,100 Cash. . Marketable securities. . 425 550 550 Accounts receivable, net.. 6,800 6,400 5,200 $ 4,900 Inventory.. Total current assets.. 6,100 4,300 3,300 2,900 16,075 14,450 13,150 7,800 Long-term assets.. 7,050 9,150 Total assets... 23,125 22,250 22,300 Accounts payable. 2,450 3,750 1,700 1,800 ........ Short-term notes payable. 5,950 4,750 3,625 . Total current liabilities.... 7,200 5,325 9,700 . Total long-term liabilities. 551 2,933 6,958 . Selected income statement data 2017 2018 2016 2015 Net sales revenue (assume all sales are credit sales).. Cost of goods sold.. Operating expenses... Interest expense.. $ 34,025 $ 33,050 $ 32,200 $ 31,300 20,755 11,975 14,812 16,195 13,490 255 13,650 150 388 300 Income taxes....... 1,121 1,010