ABC COMPANY
	BALANCE SHEET
	Year 2	Year 1
Current Assets:
Cash and cash equivalents	$ 50,000	$ 35,000
Trading Securities ( at fair value)	75,000	65,000
Accounts Receivable	300,000	290,000
Inventory (at lower of cost or market)	290,000	275,000
Total Current Assets	715,000	665,000
Investments available for sale (at fair value)	350,000	300,000
Fixed Assets:
Property, Plant and Equipment (at cost)	1,900,000	1,800,000
Less: Accumulated Depreciation	(380,000)	(350,000)
	1,520,000	1,450,000
Goodwill	30,000	35,000
Total Assets	$ 2,615,000	$ 2,450,000
Current Liabilities:
Accounts Payable	$ 150,000	$ 125,000
Notes Payable	325,000	375,000
Accrued and other liabilities	220,000	200,000
Total current liabilities	695,000	700,000
Long-Term Debt:
Bonds and notes payable	650,000	600,000
Total liabilities	1,345,000	1,300,000
Stockholders' Equity:
Common Stock ( 1000,000) shares outstanding	500,000	500,000
Additional Paid in Capital	350,000	350,000
Retained Earnings	420,000	300,000
Total Equity	1,270,000	1,150,000
Total Liablities and Equity	$ 2,615,000	$ 2,450,000
The following information about ABC is related to the year ended 12/31/xx; year 2
Sales	$ 1,800,000
Cost of Goods Sold	(1,000,000)
Gross Profit	800,000
Operating Expenses	(486,970)
Interest Expense	(10,000)
Earnings before income tax	303,030
Income tax (34%)	$ (103,030.00)
Net Income after tax	$ 200,000
Earnings per share	$2
Operating Cash Flow	$255,000
Yearly Dividends	$.80/per share
Market price/share	$ 12.00

Based on the financial data provided, the financial discussions in this class and prior classes as well as the ratio information on CourseWeb and other available information (1) calculate the following equations and ratios AND BRIEFLY COMMENT on the results. Additionally, (2) please indicate 5 ratios that are important for your project and give an explanation as to why. MUST SHOW YOUR CALCULATIONS AND EXPLAIN FOR ANY CREDIT.

Liquidity

1. Working Capital

2. Current Ratio

3. Acid-test Ratio

Activity

4. Accounts Receivable Turnover

5. Accounts Receivable Turnover in Days (also referred to as Days sales outstanding)

6. Inventory turnover

7. Inventory Turnover in days (also referred to as Days sales in inventory)

8. Operating Cycle

9. Asset turnover

Profitability

10. Net Profit Margin

11. Return on Total assets

12. Return on Investment

13. Return on Equity

Ability to Pay Long Term Debt (Solvency)

14. Debt to Equity

15. Debt Ratio

16. Times Interest Earned

17. Operating cash flow to Debt