for Chapter 3: Problem #1 in the text (Chapter 3) Sweet Dreams Corp. Income Statement For the Year Ended Dec. 31 2017 Sweet Dreams Corp. Balance Sheet As of Dec. 31 2017 Sales 2017 2016 3,074,000 2,567,000 Assets Cash 2017 431,000 2016 339,000 Gross Profit Selling and G&A Cost of Goods Sold 2,088,000 1,711,000 986,000 856,000 294,000 295,000 Accounts Receivable Inventories 503,000 365,000 Total Current Assets 289,000 1,223,000 1,004,000 300,000 Expenses Fixed Expenses Depreciation 35,000 35,000 239,000 223,000 Gross Fixed Assets 4,669,000 4,322,000 Accumulated 2,295,000 2,056,000 Expense Depreciation EBIT Interest Expense Earnings Before 418,000 303,000 93,000 91,000 325,000 212,000 Net Fixed Assets 2,374,000 2,266,000 Total Assets 3,597,000 3,270,000 Liabilities and Owners' Equity Taxes Taxes Net Income 94,000 64,000 231,000 148,000 Accounts Payable 382,000 270,000 Short-term Notes 79,000 99,000 Payable Accrued Expenses 159,000 114,000 Total Current Liabilities 620,000 483,000 Long-term Debt 1,023,000 967,000 Total Liabilities 1,643,000 1,450,000 Common Stock 819,000 808,000 Retained Earnings 1,135,000 1,012,000 Total Shareholder's Equity 1,954,000 1,820,000 Total Liabilities and Owners' Equity 3,597,000 3,270,000 c) Using the following 2017 industry averages, evaluate Sweet Dreams Corp.'s financial situation. Use the ratio analysis system in sheet 3 in the attached excel file for HW_Chapter 3. Ratio Current Ratio Value Ratio Value 2.50x Debt to Equity 0.90x Quick Ratio 0.60x Long-Term Debt to Equity 40.00% Inventory Turnover Ratio 6.50x Times Interest Earned 2.50x Accounts Receivable 8.00x Cash Coverage Ratio 3.50x Turnover Ratio Average Collection Period 40.00 Gross Profit Margin 20.00% days Fixed Asset Turnover 2.00x Operating Profit Margin 7.00% Total Asset Turnover 2.00x Net Profit Margin 5.00% Total Debt Ratio 50.00% Return on Total Assets 5.00% Long-Term Debt Ratio 20.00% Return on Equity 8.00% LTD to Total Capitalization 30.00% Return on Common Equity 10.00%