Integrative: Complete ratio analysis Given the following financial statements, historical ratios, and industry averages calculate Sterling Company's financial ratios for the most recent year. (Assume a 365-day year.) Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm's liquidity, activity, debt, profitability, and market. The current ratio is (Round to two decimal places.) CIED Data table Sterling Company Income Statement for the Year Ended December 31, 2022 Sales revenue $10,016,000 Less: Cost of goods sold Gross profits 7,506,000 $2,510,000 Less: Operating expenses Selling expense $315,000 General and administrative expenses 636,000 Lease expense 51,500 Depreciation expense 194,000 Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate = 21%) Net profits after taxes 1,196,500 $1,313,500 209,000 $1,104,500 231,945 Less: Preferred stock dividends Earnings available for common stockholders Earnings per share (EPS) (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) Sterling Company Balance Sheet December 31, 2022 $872,555 39,150 $833,405 $4.36 Assets Liabilities and Stockholders' Equity Current assets Cash Current liabilities $209,000 Accounts payable [b] $919,000 Marketable securities 48,000 Notes payable 195,000 Accounts receivable 781,000 Accruals 105,000 Inventories 927,000 Total current liabilities $1,219,000 Total current assets $1,965,000 Gross fixed assets (at cost) (a) $12,017,000 Less: Accumulated depreciation Net fixed assets 2,994,000 $9,023,000 Other assets $987,000 Long-term debt (includes financial leases) [c] Stockholders' equity Preferred stock (26,100 shares, $1.50 dividend) Common stock (191,000 shares at $2.50 par) [d] $3,071,500 $986,000 477,500 Paid-in capital in excess of par value Retained earnings Total stockholders' equity Total liabilities and Total assets $11,975,000 stockholders' equity 5,198,000 1,023,000 $7,684,500 $11,975,000 [a] The firm has an 8-year financial lease requiring annual beginning-of-year payments of $51,500. Five years of the lease have yet to run. (b) Annual credit purchases of $6,197,000 were made during the year. [c] The annual principal payment on the long-term debt is $85,000. [d] On December 31, 2022, the firm's common stock closed at $40.06 per share. Data table (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) Historical and Industry Average Ratios for Sterling Company Ratio Actual 2020 Actual 2021 Industry average, 2022 Current ratio 1.34 1.49 1.79 Quick ratio 0.97 0.89 1.02 Inventory turnover 9.73 9.42 8.81 Average collection period 44.9 days 36.2 days 34.80 days Average payment period 60.4 days 62.7 days 47.5 days Total asset turnover 0.75 0.81 0.75 Debt ratio 0.21 0.21 0.31 Times interest earned ratio 8.0 7.1 7.8 Fixed-payment coverage ratio 5.1 4.8 4.8 Gross profit margin 0.30 0.27 0.25 Operating profit margin 0.12 0.12 0.10 Net profit margin 0.084 0.084 0.075 Return on total assets (ROA) 0.064 0.069 0.059 Return on common equity (ROE) 0.095 0.101 0.100 Earnings per share (EPS) $3.06 $3.51 $2.81 Price/eamings (P/E) ratio 8.2 6.7 7.4 Market/book (M/B) ratio 1.18 1.03 1.08