On the back of this page are the comparative financial statements for Example Company for years 5 and 6 of their existence. Using those financial statements calculate the following ratios Round final answers to 3 decimals such as 3.265 or 16.8% which would be the same as .168. PLEASE SHOW YOUR WORK in the following format: Year 5 Debt Ratio - Total Liabilities $1,000 = 0.400 Total Assets $2,500 Year 6 $2,000 = 0.556 $3,600 a. b. c. d. e. . f. Debt ratio for year 5 and debt ratio for year 6 Quick ratio for year 5 and quick ratio for year 6 Return on Sales for year 5 and debt ratio for year 6 Return on Equity for year 6 only. Return on Total Assets for year 6 only. Accounts Receivable Turnover Ratio for year 6 only. Assuming Example Company is a retail hardware store, pick ONE of the ratios calculated above and explain why it is a concern to you. Assuming Example Company is a retail hardware store, pick ONE of the ratios calculated above and explain why you think it indicates good performance or a strong financial position. g. h. Year 6 $3,800 (300) $3,500 2,030 1,470 380 260 240 38 918 352 100 28 60 88 70 0 70 570 171 $399 Year 6 $992 399 (120) Year 6 Example Company Income Statement For the Years Ended December 31, Year 5 & Year 6 Year 5 Sales $3,000 - Sales Returns (200) Net Sales $2,800 Cost of Goods Sold 1,530 Gross Profit 1,270 - Operating Expenses Wages Expense 300 Depreciation Expense 250 Rent Expense 200 Bad Debts Expense 30 Total Operating Expenses 780 Income From Operations 490 Other Revenue Interest Income 60 Gain on Sale of Assets 160 Other Expense Interest Expense 50 Loss on Sale of Assets 40 90 Income Before Income Tax 560 Income Tax Expense 168 Net Income $392 Example Company Retained Earnings Statement For the Years Ended December 31, Year 5 & Year 6 Year 5 Beginning Balance of Retained Earnings $700 + Net Income for the Year 392 - Dividends Declared during the Year (100) Ending Balance of Retained Eaming 5992 Example Company Balance Sheet As of December 31, Year Sand Year 6 ASSETS Year 5 Current Assets Cash $200 Accounts Receivable 1,000 Allowance for Doubtful Accounts (60) Merchandise Inventory 520 Prepaid Rent 40 Total Current Assets $1,700 Investments & Funds Building Fund 90 Available for Sale Securities 60 Total Investments & Funds 150 Fixed Assets Equipment 7,000 Accumulated Depreciation (800) Total Fixed Assets 6,200 Intangible Assets Goodwill 340 Total Intangible Assets 340 TOTAL ASSETS $8,390 LIABILITIES Current Liabilities Accounts Payable 535 Interest Payable 25 Cash Dividends Payable 50 Income Taxes Payable 168 Total Current Liabilities $778 Long Term Liabilities Bonds Payable 2,000 Discount on Bonds Payable (80) Total Long Term Liabilities 1,920 TOTAL LIABILITIES 2,698 STOCKHOLDERS' EQUITY Paid In Capital Common Stock, S10 par, 200 and 210 shares issued 2,000 Paid in Capital in Excess of Par 2.700 Total Paid in Capital 4,700 Retained Earnings 992 TOTAL STOCKHOLDERS' EQUITY 5,692 TOTAL LIANILITIUS AND STOCKHOLDERS' EQUITY $8,390 $610 1,250 (98) 340 15 $2,117 150 80 230 7,500 (1,060) 6,440 340 340 $9,127 330 45 0 171 $546 2,400 (90) 2,310 2,856 2,100 2.900 5,000 1,271 6,271 $9,127 On the back of this page are the comparative financial statements for Example Company for years 5 and 6 of their existence. Using those financial statements calculate the following ratios Round final answers to 3 decimals such as 3.265 or 16.8% which would be the same as .168. PLEASE SHOW YOUR WORK in the following format: Year 5 Debt Ratio - Total Liabilities $1,000 = 0.400 Total Assets $2,500 Year 6 $2,000 = 0.556 $3,600 a. b. c. d. e. . f. Debt ratio for year 5 and debt ratio for year 6 Quick ratio for year 5 and quick ratio for year 6 Return on Sales for year 5 and debt ratio for year 6 Return on Equity for year 6 only. Return on Total Assets for year 6 only. Accounts Receivable Turnover Ratio for year 6 only. Assuming Example Company is a retail hardware store, pick ONE of the ratios calculated above and explain why it is a concern to you. Assuming Example Company is a retail hardware store, pick ONE of the ratios calculated above and explain why you think it indicates good performance or a strong financial position. g. h. Year 6 $3,800 (300) $3,500 2,030 1,470 380 260 240 38 918 352 100 28 60 88 70 0 70 570 171 $399 Year 6 $992 399 (120) Year 6 Example Company Income Statement For the Years Ended December 31, Year 5 & Year 6 Year 5 Sales $3,000 - Sales Returns (200) Net Sales $2,800 Cost of Goods Sold 1,530 Gross Profit 1,270 - Operating Expenses Wages Expense 300 Depreciation Expense 250 Rent Expense 200 Bad Debts Expense 30 Total Operating Expenses 780 Income From Operations 490 Other Revenue Interest Income 60 Gain on Sale of Assets 160 Other Expense Interest Expense 50 Loss on Sale of Assets 40 90 Income Before Income Tax 560 Income Tax Expense 168 Net Income $392 Example Company Retained Earnings Statement For the Years Ended December 31, Year 5 & Year 6 Year 5 Beginning Balance of Retained Earnings $700 + Net Income for the Year 392 - Dividends Declared during the Year (100) Ending Balance of Retained Eaming 5992 Example Company Balance Sheet As of December 31, Year Sand Year 6 ASSETS Year 5 Current Assets Cash $200 Accounts Receivable 1,000 Allowance for Doubtful Accounts (60) Merchandise Inventory 520 Prepaid Rent 40 Total Current Assets $1,700 Investments & Funds Building Fund 90 Available for Sale Securities 60 Total Investments & Funds 150 Fixed Assets Equipment 7,000 Accumulated Depreciation (800) Total Fixed Assets 6,200 Intangible Assets Goodwill 340 Total Intangible Assets 340 TOTAL ASSETS $8,390 LIABILITIES Current Liabilities Accounts Payable 535 Interest Payable 25 Cash Dividends Payable 50 Income Taxes Payable 168 Total Current Liabilities $778 Long Term Liabilities Bonds Payable 2,000 Discount on Bonds Payable (80) Total Long Term Liabilities 1,920 TOTAL LIABILITIES 2,698 STOCKHOLDERS' EQUITY Paid In Capital Common Stock, S10 par, 200 and 210 shares issued 2,000 Paid in Capital in Excess of Par 2.700 Total Paid in Capital 4,700 Retained Earnings 992 TOTAL STOCKHOLDERS' EQUITY 5,692 TOTAL LIANILITIUS AND STOCKHOLDERS' EQUITY $8,390 $610 1,250 (98) 340 15 $2,117 150 80 230 7,500 (1,060) 6,440 340 340 $9,127 330 45 0 171 $546 2,400 (90) 2,310 2,856 2,100 2.900 5,000 1,271 6,271 $9,127