7 Part 1 of 2 Williams Company is a manufacturer of auto parts having the following financial statements for 2018-2019. Cash Accounts Balance Sheet December 31 2019 2018 $ 260,000 $ 135,000 receivable 10 points Inventory 150,000 385,000 225,000 175,000 Total current $ 795,000 $ 535,000 assets Skipped Long-lived assets 1,640,000 1,500,000 Total assets $2,435,000 $2,035,000 Current 200,000 eBook 175,000 liabilities Long-term debt 900,000 800,000 Shareholders' 1,335,000 1,060,000 Print equity Total debt and $2,435,000 $2,035,000 equity Reference Income Statement For the years ended December 31 Sales 2019 $3,500,000 Cost of sales 2,500,000 Gross margin 1,000,000 Operating expenses* Operating income Taxes 2018 $3,600,000 2,600,000 1,000,000 500,000 450,000 500,000 550,000 175,000 192,500 Net income. $ 325,000 $357,500 Cash Flow from Operations Net income Plus depreciation expense + Decrease (-increase) in accounts receivable and inventory 2019 $325,000 60,000 (135,000) 2018 $357,500 50,000 + Increase (-decrease) in current liabilities Cash flow from operations *Operating expenses include depreciation expense. 25,000 $275,000 $407,500 Additional financial information, including industry averages for 2019, where appropriate, includes: 2019 2018 Industry 2019 Capital expenditures $ 125,000 $100,000 Income tax rate Depreciation expense Dividends $ 35% 60,000 $ 50,000 $ 35% 35.0% 50,000 50,000 Year-end stock price $ 2.25 $ 2.75 25.00 Number of outstanding 1,800,000 1,800,000 shares Sales multiplier 1.50 Free cash flow multiplier Earnings multiplier Cost of capital Accounts receivable turnover Inventory turnover 18.00 9.00 5.0% 5.0% 11.10 10.50 Current ratio 2.30 Quick ratio 1.90 Cash flow from 1.20 operations ratio Free cash flow ratio 1.10 Gross margin percentage 30.0% Return on assets (net) 20.0% book value) Return on equity 30.0%