Find below the Balance Sheet and the Income Statement of a company. All values are in CAD (Canadian Dollars).

Balance Sheet

Assets

Cash 75

Accounts Receivables 150

Inventory 175

Equipment 1,200

Accumulated Depreciation(100)

Total Assets 1,500

Liabilities and Owners Equity

Accounts Payables 600

Long-Term Debt 500

Total Liabilities 1100

Owners Equity

Common Stock 200

Retained Earnings 200

Total Liabilities and Owners Equity 1,500

Income Statement

Sales(All Credit)2,000

Cost of Goods Sold(1,200)

Gross Profits 800

Marketing and Administration 80

Depreciation 70

Total Operating Expenses 150

Operating Profits 650

(EBIT or Operating Income)

Interest Expense 50

Income Before Taxes 600

Taxes 100

Net Income 500

Required:

Calculate the appropriate financial ratios to answer the following questions.

1. How liquid is a firm?

2. Is management generating adequate operating profits on the firms assets?

3. How is the firm financing its assets?

4. Is management providing a good return on the capital provided by the shareholder?

NO CALCULATION OF MARKET VALUE RATIOS.

Que 2. why do we study finance