2015 to compare 4-9. (Ratio analysis) The financial statements and industry norms are shown be for Pamplin, Inc.: a. Compute the financial ratios for Pamplin for 2014 and for 2015 to com both against the industry norms. b. How liquid is the firm? c. Areits managers generating an adequate operating profit on the firm's d. How is the firm financing its assets? e. Are its managers generating a good return on equity? INDUSTRY NORN 5.00 3.00 2.20 90.00 0.33 Current ratio Acid-test (quick) ratio Inventory turnover Average collection period Debt ratio Times interest earned Total asset turnover Foxed-asset turnover Operating profit margin Return on common equity 7.00 0.75 1.00 20% 9% 2015 $ 150 _525 $1,200 $2,600 (1,200 $1,400 Pamplin, Inc. Balance Sheet at 12/31/2014 and 12/31/2015 Assets Cash $ 200 Accounts receivable 450 Inventory 550 Current assets $1,200 Plant and equipment $2,200 Less accumulated depreciation (1.000) Net plant and equipment $1,200 Total Total assets $2.400 Liabilities and Owners' Equity Accounts payable $ 200 Notes payable-current (9%) Current liabilities $ 200 Bonds (833% interest) Total debt $ 800 Owners' equity common stock $ 300 Paid-in capital 500 Retained earnings 700 Total owners' equity Total liabilities and owners' equity $1,600 $2.400 $2.600 $ 150 150 $ 300 600 600 $ 900 $ 300 800 $1.700 $2,600 2015 $1,450 850 $ 600 Pamplin, Inc. Income Statement for Years Ending 12/31/2014 and 12/31/2015 2014 Sales* $1,200 Cost of goods sold 700 Gross profit $ 500 Operating (expenses) (30) Depreciation 220 Operating profits $ 250 Interest expense (50) Net income before taxes $ 200 Taxes (40%) Net income $ 120 "15% of sales are cash sales, with the remaining 85% being credit sales. 250 240 $ 360 (64) $ 296 80 118 $ 178