7. Based on the following information for XYZ Corporation, answer each question (calculate for year 2018). Assume that price per share is $15.5 and number of shares is 250.

2018 Income Statement
Sales		10,000
Cost of goods sold		6,000
Depreciation		1,500
EBIT		?
Interest		500
Taxable Income		?
Taxes		?
Net Income		?
Dividends paid		790
Additional to RE
Balance Sheet
	2017	2018
Cash	1,000	1,250
Acct. receivable	1,300	1,800
Inventory	1,400	1,500
Total current assets	3,700	4,550
Net fixed assets	8,000	8,400
Total Assets	11,700	12,950
Acct. payable	1,000	1,100
Notes payable	2,500	2,650
Total current liabilities	3,500	3,750
Long-term debt	4,000	4,280
Total Liabilities	?	?
Common stock	1,700	1,890
Retained Earnings	2,500	3,030
Total Equity	4,200	4,920
Total Liabilities/Equity	11,700	12,950

1. What are the XYZs tax liabilities? Use a 34 percent tax rate throughout. (2)

2. Calculate cash flow from assets (CFFA generating), cash flow to creditors, and cash flow to stockholders. Check CF identity. (6)

3. Based on the 2018 financial statements for XYZ Corp., (1) calculate XYZs financial ratios. Briefly (2) explain what the ratio is measuring. Compare the ratios for XYZ Corp. to the industry average ratios. (3) Indicate whether or not XYZ Corp. is in a better financial position.

1. Debt-to-Equity Ratio (industry average = 0.96) (3)

2. Current Ratio (industry average = 1.17) (3)

3. Days Sales in Receivable (industry average = 65) (

4. Profit margin (industry average = 0.05) (3)

5. Price Earnings Ratio (industry average = 5. (3)

4. Find the Du Pont Identity (Show all three components.) (3)

e. Overall your comments on XYZs performance based on your ratio analysis (at least two paragraphs)