a. Calculate the firms 2003 financial ratios given in the table above.

b. Analyze the firms current financial position from industry Break your analysis into evaluations of the firms liquidity, activity, debt, profitability, and market.

c. Summarize the firms overall financial position on the basis of your findings in part b.

Martin Manufacturing Company Historical ratios Actual 2002 Ratio Actual 2003 Industry average 2003 Current ratio Quick ratio Inventory turnover (times) Average collection period Total asset turnover times) Debt ratio Times interest warned ratio Gross profit margin 1.5 1.2 10.2 46 days 2.0 24.5% 2.5 26.01% 1.2% 2.4% 3.2.% Return on total assets (ROA) Return on common equity (ROE) Pricelearnings (P/E) ratio Market/book (M/B) ratio 43.4 1.2 December 31 2003 2002 Assets Current assets Cash $ 25,000 $ 24,100 Accounts receivable 805,556 763,900 Inventories 700,625 763,445 Total current assets $1,531,181 $1,551,445 Gross fixed assets (at cost) $2,093,819 $1,691,707 Less: Accumulated depreciation 500,000 348,000 Net fixed assets $1,593,819 $1,343,707 Total assets $3,125,000 $2,895,152 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 230,000 $ 400,500 Notes payable 311,000 370,000 Accruals 75,000 100,902 Total current liabilities $ 616,000 $ 871,402 Long-term debt $1,165,250 $ 700,000 Total liabilities $1,781,250 $1,571,402 Stockholders' cquity Preferred stock (2,500 shares, $1.20 dividend) $50,000 $ 50,000 Common stock (100,000 shares at S4 par) 400,000 400,000 Paid-in capital in excess of par value 593,750 593,750 Retained earnings 300,000 280,000 Total stockholders' equity $1,343,750 $1,323,750 Total liabilities and stockholders' equity $3,125,000 $2,895,152 The firm's 100,000 outstanding shares of common stock closed 2003 at a price of $11.38 per share Income Statement for the Year Ended December 31, 2003 $5,075,000 3,704,000 $1,371,000 $650,000 416,000 152,000 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 40%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 1,218,000 $ 153,000 93,000 $ 60,000 24,000 $36,000 3,000 $ 33,000 Earnings per share (EPS) $0.33