Calculate (and document) suitable ratios with respect to of a) liquidity, b) solvency, c) profitability and d) efficiency

BRIEFLY (maximum of 400 words) use these ratios to respond to the following 3 questions. Long rambling answers will not be graded if you understand the ratios, you can be precise in answering.

If this company approached you to buy your product on your normal 30-day trade credit terms, would you extend them trade credit. Justify your agreement to sell to them or not to sell to them using financial ratios

If this firm approached you to lend them long term funds, would you advance funds to them. Why or why not.

Explain and quantify why the percentage return on equity to shareholders is significantly higher than the percentage of operating return on assets used.

Data Set

CUSABA INCORPORATED - BALANCE SHEET AS AT DECEMBER 31, 2019

ASSETS			LIABILITIES AND EQUITY
Cash	$27,000		Accounts Payable	$112,500
Marketable Securities	7,500		Bank Loan	262,500
Accounts Receivable	675,000		Accrued Expenses	4,500
Inventory	487,500		Interest Payable	1,500
Prepaid Expenses	10,500		Long Term Bonds Payable	255,000
Property Plant and Equipment	247,500		Common Stock	264,000
Goodwill	45,000		Retained Earnings	600,000
Total Assets	$1,500,000		Total Liabilities and Equity	$1,500,000

CUSABA INCORPORATED - INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019

Sales (all on credit)	$2,700,000
Cost of goods sold	1,800,000
Gross profit	900,000
Selling and admirative expense	375,000
Depreciation	30,000
Operating Income	495,000
Interest Expense	46,500
Earnings before taxes	448,500
Income Taxes	112,500
Net Income	$336,000