I basically konw the answer but I also need explanations on why the answer is correct. If a question requires a numerical answer, provide a formula that helps to solve it.

Fundamental Problem with Worked Solutions Using the income statement and balance sheet presented here, compute the following ratios. Compare your results with the industry averages. What strengths and weak- nesses are apparent? Industry Average 2:1 1:1 4.0% 23x Ratio Current ratio Acid test (quick ratio) Inventory turnover a. Annual sales b. Cost of goods sold Receivables turnover a. Annual credit sales b. Annual sales Average collection period Operating profit margin Net profit margin Return on assets Return on equity Debt ratio a Debt/equity b. Debt total assets Times-interest-eared 5.0X 60x 25 months 26% 19% 10% 15% 33% 25% 7.1% 3.200 Income Statement for XYZ for the period ending December 31, 20X1 Sales $100,000 Cost of goods sold 60.000 Gross profit 40,000 Selling and administrative expense 15.000 Operating profit 25,000 Interest expense 5.000 Earnings before taxes 20,000 Taxes Earnings available to stockholders $ 16800 Number of shares outstanding 10,000 Earnings per share $1.68 (To compute the inventory turnover, assume that the prior year's inventory was 540,000.) Firm XYZ Balance Sheet as of December 31, 20x1 Assets Current assets Cash and marketable securities $ 10.000 Accounts receivable $ 32,000 Less allowance for doubtful accounts 2000 30,000 Inventory Finished goods 30,000 Work in progress 5.000 Raw materials 7000 42.000 Total current assets $ 82,000 Investments 5 10,000 Long-term assets Plant and equipment 100,000 Less accumulated depreciation 30 000 70,000 Land 10000 Total long-term assets $ 80 000 Total assets 172.000 Liabilities & Stockholders Equity Current abilities Accounts payable $ 10,000 Accrued wages 11.000 Banknotes 15.000 Accrued interest payable 4,000 Accrued taxes 1000 Total current liabilities $ 41,000 Long-term debe Total liabilities $ 56,000 Stockholders' equity Common stock (si par value, 20,000 shares authorized: 10,000 shares outstanding) $ 10,000 Additional paid in capital 20.000 Retained earnings 86.000 Total stockholders equity $116.000 Total abilities and equity $122.000 $ 15000