After graduating from college in May 2018, Ryan Crews started his career in finance at the W&T Corporation, a small- to medium-sized warehouse distributor in Nashville, Tennessee. The company was founded by David Winston and Colin Tabor in 2005, after they have worked together in management at Walmart. Although Crews had an offer from Sam's Club, he became excited about the opportunity with W&T For W&T, 2017 turned out to be a good financial year. But in 2018, the company experienced a 5.2 percent sales reduction, where sales declined from $5.9 million to $5.6 million. The downturn then led to other financial problems, including a 50 percent reduction in the company's stock price. The share price went from $42 per share at the end of 2017 to $21 per share at the end of 2018! David Winston and Colin Tabor want to understand what may have happened. Financial information for W&T for both years is shown in the popup window, where all the numbers, except for per-share data, are shown in thousands. a. Using what you have learned in this chapter and Chapter 3, prepare a financial analysis of W&T, comparing the firm's financial performance between the two years. (1) Compute the financial ratios as shown in the popup window, E, for 2017 and 2018. (2) Complete a common-sized income statement for 2017 and 2018 (3) Complete a common-sized balance sheet for 2017 and 2018 (4) Compute the price/earnings and price/book ratios for 2017 and 2018. b. What conclusions can you make from your analysis? c. What recommendations would you make to management? 2017 2018 Current ratio Acid-test ratio Days in receivables Days in inventories Operating return on assets Operating profit margin Total asset turnover Fixed asset turnover Debt ratio Times interest earned Return on equity W and T Corporation Income Statement ($ thousands) for the Years Ended 12/31/2017 and 12/31/2018 2017 2018 Sales 5,900 5,600 (3,600) (3,400) Cost of goods sold Gross profits $ 2,300 $ 2,200 Operating expenses: Selling, general, and administrative expenses (800) (750) (320) (500) Depreciation expenses $ (1,120) $ (1,250) Total operating expenses Operating profits $ 1,180 950 (180) (265) Interest expense Earnings before taxes (taxble income) $ 1,000 $ 685 (210) (144) Income taxes 790 $ 541 Net income Additional information: Number of common shares outstanding 160 160 Dividends paid to stockholders $135 $135 Market price per share $42 $21 W and T Corporation Balance Sheet ($ thousands) for 12/31/2017 and 12/31/2018 2017 2018 ASSETS Cash 400 495 Accounts receivable 800 915 Inventories 500 780 125 170 Other current assets Total current assets $ 1,825 2,360 Gross fixed assets $ 4,650 $ 4,950 (1,600) (2,300) Accumulated depreciation $ 3,050 2,650 Net fixed assets $ 4,875 5,010 Total assets LIABILITIES (DEBT) AND EQUITY Accounts payable 400 740 350 400 Short-term notes payable Total current liabilities 1,140 750 1,350 1,400 Long-term debt Total liabilities 2,100 $ 2,540 Common equity: Common stock 1,000 1,000 1,775 1,470 Retained earnings $ 2,775 $ 2,470 Total common equity 4,875 $ 5,010 Total liabilities and equity