1. Choose one publicly traded company and calculate two financial ratios for that company for 2020 and 2021 (or 2019 and 2020 if 2021 not available) ? Be sure to include 1 liquidity or credit risk ratio and1 profitability ratio ? Then answer the following questions: a. From these ratios, does the company seem like a good investment for a potential equity investor? What about a creditor? Why or why not? b. Compare one of these ratios to a similar company - either a competitor or another firm in the same industry. ? Which seems like a better investment? Why?

2.Selected information taken from the financial statements of Wiley Company for two successive years follows. Compute the percentage change from year 1 to year 2 whenever possible. Round all calculations to the nearest whole percentage.

Year 2 Year 1

a. Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,000 $160,000

b. Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0- 250,000

c. Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 (80,000)

d. Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 -0-

e. Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890,000 800,000

f. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,000 80,000

g. Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970,000 910,000

3. Compute trend percentages for the following items taken from the financial statements of Lopez Plumbing over a five-year period. Treat 2017 as the base year. State whether the trends are favorable or unfavorable. (Dollar amounts are stated in thousands.)

2021 2020 2019 2018 2017

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $81,400 $74,000 $61,500 $59,000 $50,000

Cost of goods sold . . . . . . . . . . . . . . . . . . . 58,500 48,000 40,500 37,000 30,000

4. Roy's Toys is a manufacturer of toys and other children's products. The following are selected items appearing in a recent balance sheet (dollar amounts are in millions)

Cash and short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47.3

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159.7

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.3

Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.0

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130.1

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279.4

Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344.0

a. Using the information given, compute the amounts of Roy's Toys

(1) quick assets

(2) total current assets.

b. Compute for Roy's Toys the

(1) quick ratio

(2) current ratio

(3) dollar amount of working capital. (Round ratios to one decimal place.)

c. Discuss whether Roy's Toys appears liquid from the viewpoint of a short-term creditor.

5. Obtain from the Internet, your college library, or other source the most recent annual report of a publicly owned company of your choice.

a. Using the annual report data, compute the basic measures of liquidity, long-term credit risk, and profitability summarized in Exhibit 14-26. Compare these measures with the appropriate industry norms available in your library or other source. Briefly comment on your findings. (SEE ATTACHED FILE)

EXHIBIT 14-26 Summary of Analytical Measures Ratios or Other Method of Measurements Computation Significance Measures of short-term liquidity Current ratio Current Assets A measure of short-term debt-paying Current Liabilities ability Quick ratio Quick Assets A measure of short-term debt-paying Current Liabilities ability Working capital Current Assets - Current Liabilities A measure of short-term debt-paying ability Net cash provided by Appears in the statement of cash flows Indicates the cash generated by operating activities operations after allowing for cash payment of expenses and operat- ing liabilities Cash flow from operations to Cash Flows from Operating Activities Indicates ability to cover currently current liabilities Current Liabilities maturing obligations from recurring operations Accounts receivable turnover rate Net Sales Indicates how quickly receivables Average Accounts Receivable are collected Days to collect average accounts 365 Days Indicates in days how quickly receivable Accounts Receivable Turnover Rate receivables are collected Inventory turnover rate Cost of Goods Sold Indicates how quickly Average Inventory inventory sells Days to sell the average inventory 365 Days Indicates in days how quickly Inventory Turnover Rate inventory sells Operating cycle Days to Sell Inventory + Indicates in days how quickly cash Days to Collect Receivables invested in inventory converts back into cash Free cash flow Net Cash from Operating Activities - Cash Excess of operating cash flow over Used for Investing Activities and Dividends basic needs Measures of long-term credit risk Debt ratio Total Liabilities Percentage of assets financed by Total Assets creditors; indicates relative size of the equity position Trend in net cash provided by Appears in comparative statements of cash flows Indicator of a company's ability to operating activities generate the cash necessary to meet its obligations Interest coverage ratio Income before Interest and Taxes Indicator of a company's ability Annual Interest Expense to meet its interest payment obligations Measures of profitability Percentage changes; that is, Dollar Amount of Change The rate at which a key measure in net sales and net income Financial Statement Amount in the Earlier Year is increasing or decreasing; the "growth rate" Gross profit rate Gross Profit A measure of the profitability of the Net Sales company's products Operating expense ratio Operating Expenses A measure of management's ability to Net Sales control expenses