1. Calculate the projected profit margin, operating profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios? 2. Calculate the projected inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover. How does Abiproffy's utilization of assets stack up against other firms in its industry? 3. Calculate the projected current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position and its trend? 4. Calculate the projected debt ratio, the debt-to-equity ratio, liabilities-to-assets ratio, earnings multiplier, times-interest-earned, and EBITDA coverage ratios. How does Abiproffy compare with the industry with respect to financial leverage? What can you conclude from these ratios? 5. Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? 6. It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers. Increasingly, this is becoming a more difficult task. Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results. Balance Sheets 2018 2019 2020E Assets Cash and equivalents Short-term investments $ 60 $ 50 $ 60 100 10 50 Accounts receivable 400 520 530 Inventories 620 820 660 Total current assets $1,180 $1,400 $1,300 Net Fixed Assets 2,900 3,500 3,700 Total Assets $4.080 $4,900 $5,000 Liabilities and equity 2018 2019 2020E Accounts payable $ 300 $ 400 $ 330 Notes payable 50 250 100 Accruals Total current liabilities 200 240 270 $ 550 $ 890 $ 700 Long-term bonds 800 1,100 1,100 Total liabilities $1,350 $1,990 $1,800 Common stock (100,000 shares) 1,000 1,000 1,000 Retained earnings 1,730 1,910 2,200 Total common equity $2,730 $2,910 $3,200 Total liabilities and equity $4,080 $4,900 $5,000 Income Statements Net sales Cost of goods sold (Excluding depr.) Depreciation Other operating expenses Earnings before interest and taxes (EBIT) Less interest Pre-tax earnings Taxes (25%) Note: "E" denotes the "estimated forecast." 2018 2019 2020E $5,500 $6,000 $6,600 4,300 4,800 5,210 290 320 370 350 420 400 $ 560 $ 460 $ 620 68 108 100 $ 492 123 $ 352 88 $ 520 130