Amaze Online Pvt. Ltd. owns and operates a chain of consultancy firms throughout the Dallas-Fort Worth metroplex. The rapidly expanding population of the area has resulted in the firm requiring a growing amount of funds.

Historically, the firm has reinvested earnings and borrowed using short-term bank notes. Balance sheets for the last 4 years are found below (in $000):

a. Compute the firm’s current ratio (current assets divided by current liabilities) and the firm’s debt ratio (current plus long-term liabilities divided by total assets) for the 4-year period found above. Describe the firm’s risk using both the current ratio and debt ratio.

b. Comment on the company’s liquidity and leverage (leverage usually indicates the share of liabilities in assets). Note that in all of 4 years the company has experienced an increase in net profit.

c. What conclusions can you draw from the company’s financial decisions in the last year?

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2015 2016 2017 2018 Current assets $150 $130 $100 $200 Fixed assets 100 100 150 165 Total $250 $230 $250 $365 Current liabilities $ 30 $ 60 $100 $120 Long-term liabilities 50 40 80 60 60 Owner's equity 170 130 70 185 Total $250 $230 $250 $365