EFG Automobiles

Income Statement (in $ thousands)

Item	Amount
Sales Revenue	13,000
Cost of Goods Sold	8,500
Gross Profit	4,500
Operating Expenses	3,200
Operating Profit	1,300
Interest Expenses	250
Income Tax Expense	150
Net Income	900

Balance Sheet (in $ thousands)

Assets

• Current Assets
  • Cash: 300
  • Accounts Receivable: 1,800
  • Inventory: 1,500
  • Total Current Assets: 3,600
• Long-Term Assets
  • Property, Plant & Equipment (net): 3,500
  • Other Assets: 3,000
  • Total Long-Term Assets: 6,500
• Total Assets: 10,100

Liabilities and Equity

• Current Liabilities
  • Trade Creditors: 1,200
  • Short-Term Bank Loans: 800
  • Total Current Liabilities: 2,000
• Long-Term Liabilities
  • Long-Term Debt: 4,000
  • Other Liabilities: 1,000
  • Total Long-Term Liabilities: 5,000
• Total Liabilities: 7,000
• Equity
  • Common Shares: 1,500
  • Retained Earnings: 1,600
  • Total Equity: 3,100
• Total Liabilities and Equity: 10,100

Required:

1. Compute the gross profit margin and net profit margin for EFG Automobiles.
2. Calculate the return on equity (ROE) and return on assets (ROA).
3. Evaluate the company's liquidity using the current ratio and quick ratio.
4. EFG Automobiles plans to introduce a new line of electric vehicles, requiring an investment of $2,500,000. Suggest a financing strategy for this investment.
5. Propose measures to reduce the company's operating expenses and improve net income.