Background: ABC Corporation, a leading technology firm, is undergoing a comprehensive financial analysis to assess its current financial performance and make strategic decisions for the upcoming fiscal year. The company's financial statements reveal key metrics that indicate both strengths and areas that require attention.

Financial Highlights:

Income Statement:

ABC Corporation experienced a 15% increase in revenue compared to the previous year.

Operating expenses rose by 10%, primarily due to increased marketing efforts and research and development investments.

Net income witnessed a 12% growth, reflecting effective cost management.

Balance Sheet:

Total assets increased by 20%, driven by strategic acquisitions and investments in infrastructure.

Liabilities saw a 15% growth, mainly attributed to long-term debt taken on for expansion projects.

Shareholders' equity remained relatively stable.

Operational Insights: ABC Corporation introduced new products and expanded into emerging markets, contributing to revenue growth. However, the increase in operating expenses and long-term debt raises questions about sustainability and financial leverage.

Proposed Financial Statement Analysis:

Ratio Analysis: Conduct a comprehensive ratio analysis, including liquidity ratios, profitability ratios, and leverage ratios, to gain insights into ABC Corporation's financial health.

Trend Analysis: Evaluate the trend in key financial metrics over the past three years to identify patterns and assess the company's trajectory.

Implementation Plan: The finance team plans to implement these analyses, collaborating with department heads to address identified areas of concern and capitalize on strengths.

Questions:

Considering the 15% increase in revenue and the 10% rise in operating expenses, how might these factors impact ABC Corporation's overall profitability, and what ratio(s) from the financial statement analysis would be most insightful in this scenario?

With a 20% growth in total assets and a corresponding 15% increase in liabilities, how can ABC Corporation assess the efficiency of its asset utilization and manage the associated financial risk, drawing on specific financial ratios for guidance