In order to bring you up to speed with Garcia Energys current situation, you have been asked to assess Garcia Energys financial performance during 2019 and its financial position at year-end 2019. To complete this assignment, you have gathered the firms 2019 financial statements (below). In addition, your assistant obtained the firms ratio values for 2017 and 2018, along with the 2019 industry average ratios. During the year, lease payments were $50,000, while sinking fund payments were $25,000.

To Do:

1. Calculate the firms 2019 financial ratios, and then fill in the table given at the bottom of this section. (18 points; 1.5 points each) (ASSUME a 365-day year)

2. In between 200 and 300 words, analyze the firms current financial position from both a comparative and a trend standpoint. Break your analysis down into evaluations of the firms liquidity, asset management, debt, profitability, and market ratios. (10 points)

3. In between 100 and 200 words, summarize the firms overall financial position on the basis of your findings in Part I.1 and Part I.2. (2 points)

Garcia Energy Income Statement Year Ending December 31, 2019 Sales revenue Less: Cost of goods sold Gross Profit Less: Operating Expenses $6,075,000 4,000,200 $2,074,800 Selling expenses General and administrative expenses326,000 Lease payments Depreciation expense $650,000 50,000 152,000 $1178,000 $896,800 99,500 $797,300 318,920 S 478,380 Total operating expense Operating Profit (EBIT) Less: Interest expense Net profit before taxes Less: Taxes (rate-40%) Net Profit after taxes Earnings per share: Dividends per share: $4.78 $4.58 Balance Sheets December 31 Assets 2018 Current assets $ 25,000 805,556 700,625 $1,531,181 $2,593,819 600,000 $1,993,819 $ 24,100 763,900 763,445 $1.551.445 $1,691,70'7 348,000 $1.343.707 Cash Accounts receivable Inventories Total current assets Gross fixed assets (at cost) Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Notes payable Accruals S 230,000 311,000 75,000 $ 616,000 $1,565,200 $2,181,200 $ 400,450 370,000 100,902 $ 871,35!2 700,000 1,571,352 Total current liabilities Long-term debt Total liabilities Stockholders' equity Common stock (100,000 shares a Paid-in capital in excess of par value Retained earnings t S4 par) 400,000 643,800 300,000 $1343.800 400,000 643,800 280,000 $1,323.800 $2,895152 Total stockholders' equity Total liabilities and stockholders' equity Garcia Energy's 100,000 shares of common stock closed on 12/31/ 17 at a price of $54.00 per share. Garcia Energy Historical & Industry Average Ratios Ratio Industry Actual 2017Actual 2018 Actual 2019Average 2019 a. Current ratio b. Quick ratio c. Inventory turnover (times d. Days sales outstanding (DSO e. Fixed asset turnover (times f. Debt-to-assets ratio 0.9 5.0 55.8 da 3.7 52.8% 10.9 7.2% 11.0% 26.3% 10.2 3.36 10.2 46 days 3.9 24.5% 12.5 1 .2% 2.4% 17.9% 10.1 3.5 5.2 50.7 days 458% 10.2 6.0% 12.2% 21.1% 9.8 3.2 Times interest earned ratio h. Net profit margin i. Return on assets (ROA Return on common equity (ROE k. Price/earnings (P/E) ratio 1. Market value/book (M/B) ratio