P3–23 Cross-sectional ratio analysis Use the financial statements below and on the next page for Fox Manufacturing Company for the year ended December 31, 2015, along with the industry average ratios below to do the following:

a. Prepare and interpret a complete ratio analysis of the firm’s 2015 operations.

b. Summarize your findings and make recommendations.

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Fox Manufacturing Company Income Statement for the Year Ended December 31, 2015 Sales revenue Less: Cost of goods sold $600,000 460,000 $140,000 Gross profits Less: Operating expenses General and administrative expenses Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes Net profits after taxes (Hint: Earnings available for common stockholders as there are no preferred stockholders) Earnings per share (EPS) $ 30,000 30,000 60,000 $ 80,000 10,000 $ 70,000 27,100 $ 42,900 $2.15