Calculations on all questions should include Current and Prior Period and analyze between periods. 1. Calculate and analyze Return on Investment Ratios, i.e. Basic Earning Power Ratio, ROA, and ROE of Company ABC financial statements attached. 2. Calculate and analyze the Cash Conversion Cycle of Company ABC. 3. Calculate and analyze the Current and Quick Ratios of Company ABC. 4. Calculate and analyze how much times per annum does Company ABC turns over its inventory. 5. Calculate and analyze the financial leverage of Company ABC (debt-to-assets & debt-to- equity ratios). Company ABC Income Statements for Years Ending December 31 (in thousands) Current Year Prior Year 12550 7500 5050 1300 800 2950 650 9800 6700 3100 500 700 3 Sales Cost of goods sold 5 Gross profit Lease expense Administrative expense Earnings before interest and taxes (EBIT) Interest 1 Earnings before taxes 2 Taxes 3 Net income 4 Preferred dividends 5 Earnings available to common shareholders 6 Common dividends 7 Retained earnings 8 9 0 1900 500 1400 600 2300 930 1370 175 1195 800 150 650 600 500 150 595 2 $ 1 Company ABC Income Statements for Years Ending December 31 (in thousands 2 3 Description 4 Assets: 5 Current Assets: 6 Cash 600.00 $ 300.00 7 Marketable securities $ 250.00 $ 50.00 8 Accounts receivable $ 750.00 $ 775.00 9 Inventories $ 2,000.00 $ 1,300.00 10 Total Current Assets $ 3,600.00 $ 2,425.00 11 Fixed Assets: 12 Gross plant and equipment $ 10,000.00 $ 8,000.00 13 Accumulated depreciation $ 4,200.00 $ 3,500.00 14 Net plant and equipment $ 5,800.00 $ 4,500.00 15 Intangible assets $ 1,400.00 $ 1,400.00 16 Total Fixed Assets $ 7,200.00 $ 5,900.00 17 Total Assets $ 10,800.00 $ 8,325.00 18 Liabilities and Shareholder Equity 19 Accounts payable $ 700.00 $ 550.00 20 Other current liabilities $ 620.00 $ 340.00 21 Long-term debt $ 4,800.00 $ 5,200.00 22 Total liabilities $ 6,120.00 $ 6,090.00 23 Common stock, $1 par value; 24 Authorized 2,000,000 shares 25 Issued 1,750,000 and 1,000,000 shares $ 1,750.00 $ 1,000.00 26 Additional paid-in capital $ 1,750.00 $ 500.00 27 Retained earnings $ 1,180.00 $ 735.00 28 Total shareholders' equity $ 4,680.00 $ 2,235.00 29 Total liabilities and shareholder equity $ 10,800.00 $ 8,325.00 30 31