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  Company GHI is analyzing its financial statements for the year ended December 31st, 20XX. The income statement indicates total revenues of $2,400,000 and total expenses of $1,200,000, resulting in net income of $1,200,000. The balance sheet shows total assets of $18,000,000, total liabilities of $7,000,000, and total stockholders' equity of $11,000,000.

  Requirements:

  • Calculate the gross profit margin and net profit margin for Company GHI.
  • Analyze the liquidity position by calculating the current ratio and quick ratio.
  • Assess the return on equity (ROE) for Company GHI.
  • Provide recommendations for improving profitability and financial stability based on the analysis.