40. Analysis of a company's financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer the following question. Toys by Tom, Inc. has a current ratio of suggesting 9.6; reasonable ability to cover interest expense 0.57; potential illiquidity O 0.21; potential collection problems 1.75; reasonable liquidity YS BY TM TYS BY TM Income Statement Balance Sheet For year ending December 31, 2006 For year ending December 31, 2006 $ 0.50 Sales Less: COGS Less: Depreciation Gross profit Less: SG&A Operating profit Less: Interest expense Profit before tax Less: Income taxes Net Income 1.00 Assets Current Assets Cash Accounts receivable Inventories Total current assets Net fixed assets 12.00 8.40 0.80 2.80 1.20 1.60 0.25 1.35 0.54 $ 0.81 Liabilities & Owners' Equity Current Liabilities Current portion, LTD $ 0.75 Accounts payable 2.50 Other accrued expenses 1.75 Revolving credit, bank 2.00 Total current liabilities 7.00 Long-term (mortgage) debt 2.50 Net worth 4.50 2.50 4.00 10.00 Total Assets $14.00 Total Liab. & Net Worth $ 14.00 $ 14.00 * Items in $1,000 * Items in $1,000