P24 Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2019, follow. Zach Industries Income Statement for the Year Ended December 31, 2019 $160,000 106,000 $ 54,000 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes Net profits after taxes $ 16,000 10,000 1,000 10,000 $ 37,000 $ 17,000 6,100 $ 10,900 4,360 $ 6,540 Financial Statements and Ratio Analysis Zach Industries Balance Sheet December 31, 2019 Assets Cash Marketable securities Accounts receivable Inventories Total current assets Land Buildings and equipment Less: Accumulated depreciation Net fixed assets Total assets S 500 1,000 25,000 45,500 $ 72,000 $ 26,000 90,000 38,000 $ 78,000 $150,000 Liabilities and Stockholders' Equity Accounts payable Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and stockholders' equity $ 22,000 47,000 $ 69,000 22,950 31,500 26,550 $150,000 The firm's 3,000 outstanding shares of common stock closed 2019 at a price of $25 per share. a. Use the preceding financial statements to complete the following table. Assume that the industry averages given in the table are applicable for both 2018 and 2019. Ratio Actual 2018 Actual 2019 1.84 0.78 2.59 36.5 days 67% Current ratio Quick ratio Inventory turnover Average collection period Debt ratio Times interest earned ratio Gross profit margin Net profit margin Return on total assets Return on common equity Market/book ratio Industry average 1.80 0.70 2.50 37.5 days 65% 3.8 38% 3.5% 4.0% 9.5% 1.1 4.0 40% 3.6% 4.0% 8.0% 1.2 "Based on a 365-day year and on end-of-year figures