Assume that ABC Company is a small specialty retail store. Ratios are relevant when assessed over time or across companies. IBIS is a comprehensive resource containing market research and statistics, which can be used to compare ABC Company to the industry and leaders in the industry.

1. Show the computation of the three ratios.
2. Comment on the purpose and information conveyed by each ratio.
3. What did you learn about ABC Company by reviewing the three ratios?
4. What is your conclusion about the profitability of the company?
5. How successful is ABC Company relative to the industry average and leaders in the small specialty retail store industry? Write two paragraphs or more. Include ratios found in the IBIS database to support your conclusion.

ABC Company Income Statement For the Period Ending December 31, 20XX Revenues S 525,000 Cost of sales 200,000 Gross profit S 325,000 Operating expenses Salaries S 100,000 Lease for office 30,000 Advertising and promotion 24,000 Utiliies 12,750 Property taxes 18,000 Payroll taxes 11,500 Insurance 8,000 Depreciation 20,000 Miscellaneous expenses 9,000 Total operating expenses S 233,250 Operating income S 91,750 Interest income S 250 Interest expense 15,000 Net interest expense S 14,750 Net income S 77,000 ABC Company Balance Sheet December 31, 20XX Assets Liabilities Current assets Current liabilities Cash Accounts payable S 18,000 Accounts recievable Interest payable 8 000 Interest receivable 1 000 Inventory 30 000 Total current assets 144,000 Total current liabilities S 26,000 Long-term assets Long-term liabilities Equipment (net of depreciation) 128 000 Note payable 90 000 Total long-term assets 128,000 otal long-term liabilities S 90,000 quity Common stock 10,000 Paid-in capital 50,000 Retained earnings 96 000 otal equity 156 000 otal assets Total liabilities and equity 272 000