As a financial analyst in the planning department for Erin Industries, Inc., you must develop ratios from the comparative financial statements. This information is to be used to convince creditors that, despite a slight decline in sales, Erin Industries is liquid and solvent, and it deserves their continued support.

Here are the data requested and the computations developed from the financial statements:

2022

2021

Current ratio3.12.1Working capitalUp 22%Down 7%Debt to assets ratio0.600.70Net incomeUp 32%Down 8%

Erin Industries asks you to prepare brief comments stating how each of these items supports the argument that its financial health is improving. The company wishes to use these comments to support presentation of data to its creditors. With the class divided into groups, prepare the comments as requested, giving the implications and the limitations of each item regarding Erin's financial well-being.