2. From the balance sheet and income statement shown on Figures 1 and 2, determine the following for 2015: a. Debt ratio. b. Current ratio. c. Inventory turnover ratio. d. Total asset turnover ratio. e. Based on the previous information, would you say the company is in good or bad health financially? How do the ratio values indicate that? Figure 1 Assets Current assets: Cash and cash equivalents Short-term marketable sec. Accounts receivable Inventory Prepaid expenses Deferred charges Total current assets Long-term Assets: Plant and equipment Less accumulated depreciation Total assets Liabilities and Shareholders' Equity J&M, Inc. BALANCE SHEET December 31 2015 2014 $ 8,500 $ 6,100 3,000 5,000 23,700 19,500 37,700 39,800 2,000 1,500 2,500 3,000 77,400 74,900 154,000 145,000 (70,000) (50,000) $161,400 $169,900 Current liabilities: Accounts payable Wages payable Accrued taxes Total current liabilities Other liabilities Long-term debt Total liabilities 10,000 26,000 16,000 15,000 2,000 3,500 28,000 44,500 30,000 32,000 $58,000 $76,500 Shareholders' equity Preferred stock, 6%, $100 par value 10,000 10,000 Common stock, $4 par value (10,000 shares) 40,000 40,000 Additional paid-in capital 11,000 11,000 Retained earnings 42,400 32,400 Total owners' equity 103,400 93,400 Total liabilities and equity $161,400 $169,900 Figure 2 Total revenue J&M, INC. INCOME STATEMENT AND RETAINED EARNINGS Cost of revenue Gross profit Operating expenses Selling, general administration Depreciation Lease payments Total Operating income Interest pmt. (For Year Ended December 31, 2015) Income before income taxes Provision for Income taxes Net income $300,000 188,000 112,000 44,720 20,000 14,000 58,720 (58,720) 33,280 (5,200) 28,080 (8,080) $20,000